UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Amendment No. 1)
þ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIESEXCHANGE ACT OF 1934
Commission File Number 1-13884
CAMERON INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware | 76-0451843 | |
(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) | |
1333 West Loop South | ||
Suite 1700 | ||
Houston, Texas | 77027 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (713) 513-3300
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, Par Value $0.01 Per Share | New York Stock Exchange |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes RþNo £o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes £oNo Rþ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes RþNo £o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes RþNo £o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. £o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | Accelerated filer |
Non-accelerated filer | Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £o No Rþ
The aggregate market value of the Common Stock, par value $0.01 per share, held by non-affiliates of the registrant as of June 30, 2014,2015, our most recently completed second fiscal quarter, was approximately $10,963,201,206.$8,048,562,581. For purposes of the determination of the above statement amount only, all the directors and executive officers of the registrant are presumed to be affiliates.
The number of shares of Common Stock, par value $.01 per share, outstanding as of February 10, 2015January 15, 2016 was 193,721,697.
ITEM | PAGE | |
| PART I | ||
| 3 | ||
| 1. | 4 | |
| 5 | ||
| 7 | ||
| 8 | ||
| 10 | ||
| 10 | ||
| 10 | ||
| 10 | ||
| 11 | ||
| 12 | ||
| 1A. | 13 | |
| 1B. | 18 | |
| 2. | 18 | |
| 3. | 19 | |
| 4. | 21 | |
| PART II | ||
| 5. | 21 | |
| 6. | 22 | |
| 7. | 23 | |
| 7A. | 42 | |
| 8. | 44 | |
| 9. | 84 | |
| 9A. | 84 | |
| 9B. | 84 | |
| PART III | ||
| 10. | 84 | |
| 11. | 85 | |
| 12. | 85 | |
| 13. | 85 | |
| 14. | 85 | |
| PART IV | ||
| 15. | 85 | |
| 94 |
ActuatorEXPLANATORY NOTE.
This Amendment No. 1 on Form 10-K/A hydraulic or electric motor used to open or close valves.
DOCUMENTS INCORPORATED BY REFERENCE
None
TO FORM 10-K/A
For the Year Ended December 31, 2015
Page | |
4 | |
ITEM 10. Directors, Executive Officers and Corporate Governance | 4 |
11 | |
32 | |
ITEM 13. Certain Relationships and Related Transactions, and Director Independence | 34 |
36 | |
37 | |
37 | |
38 |
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers
Certain information concerning our executive officers is contained in the discussion entitled “Executive Officers of the Registrant” in Part I of our Form 10-K filed with the SEC on January 29, 2016.
Board of Directors
Our Board of Directors currently has eleven members and one advisory director. All of the directors were previously elected by stockholders at the 2015 Annual Meeting of Stockholders. The following information as to our directors, as of March 2, 2016, is based upon our records and information furnished to us by the directors.
Name |
| Age |
| Other Positions with |
| Has served as |
R. Scott Rowe |
| 45 |
| President and Chief Executive Officer |
| 2015 |
Jack B. Moore |
| 62 |
| Chairman of the Board* |
| 2007 |
H. Paulett Eberhart |
| 62 |
| Former President and Chief Executive Officer of CDI Corporation |
| 2013 |
Peter J. Fluor |
| 68 |
| Chairman and Chief Executive Officer of Texas Crude Energy, LLC |
| 2005 |
Douglas L. Foshee |
| 56 |
| Former Chairman, President and Chief Executive Officer of El Paso Corporation |
| 2008 |
Rodolfo Landim |
| 59 |
| Controlling Partner and Managing Director of Mare Investimentos S.A. |
| 2011 |
Michael E. Patrick |
| 72 |
| Retired, Vice President and Chief Investment Officer of Meadows Foundation, Inc. |
| 1996 |
Timothy J. Probert |
| 64 |
| Former President of Strategy and Corporate Development of Halliburton Corporation |
| 2015 |
Jon Erik Reinhardsen |
| 59 |
| President and Chief Executive Officer of Petroleum Geo- Services ASA |
| 2009 |
Brent J. Smolik |
| 55 |
| President, Chief Executive Officer and Chairman of the Board of Directors of EP Energy Corporation |
| 2015 |
Bruce W. Wilkinson |
| 71 |
| Lead Director; Former Chairman, President and Chief Executive Officer of McDermott International, Inc. |
| 2002 |
James T. Hackett |
| 62 |
| Advisory Director, Former Chairman, President and Chief Executive Officer of Anadarko Petroleum Corporation |
| 2012 |
*Non-executive Position
R. Scott Rowe, was named Chief Executive Officer in October 2015. He had been President and Chief Operating Officer since October 1, 2014, with responsibility for Cameron’s global operations: Subsea, Surface, Drilling, Valves and Measurement and Operational
Excellence, and prior to that he served as a Vice President for Cameron and severalChief Executive Officer for OneSubsea. He has held other partners incorporated an oilfield repair shopsignificant positions in Houston, Texas underboth Drilling and Production Systems and Valves and Measurement, including President of the nameSubsea Systems division, President of the Engineered and Process Valves division, and Vice President and General Manager of the Distributed Valves division. Mr. Rowe joined Cameron Iron Works (CIW). Abercrombie subsequently inventedin 2002 as Corporate Development Manager.
Jack B. Moore is our current Chairman of the Board. He served as Cameron’s Chief Executive Officer from May 2008 to October 2015 and CIW manufacturedwas our President from April 2008 until October 2014.
We believe Mr. Moore’s qualifications to serve on the industry’s first blowout preventer for useBoard include his over 40 years’ experience in the oil and gas well drilling. CIW grew rapidly dueindustry, his business acumen and leadership skills, and his deep understanding of our Company and its operations derived from nine years in the Company’s operating divisions, 7 years as our Chief Executive Officer and five years as our Chairman.
Mr. Moore is a director of KBR, Inc., a technology-driven engineering, procurement and construction company and defense services provider, and a director or Harbour Energy Ltd., a privately held upstream production company. He serves on the board of the Petroleum Equipment Suppliers Association, where he served as Chairman of the Board, the National Ocean Industries Association, and the American Petroleum Institute.
H. Paulett Eberhart is the former President, Chief Executive Officer and director of CDI Corporation. She joined CDI Corporation in 2011 from HMS Ventures, a privately held real estate and consulting services firm where she served as Chairman and Chief Executive Officer from 2009 to salesJanuary 2011.
We believe Ms. Eberhart’s qualifications to serve on the Board include, among others, CEO and executive leadership, financial oversight responsibilities, and energy/oilfield services, international operations, and corporate governance experience. In addition, she served as President, Americas, Senior Vice President, and President of blowout preventersSolutions Consulting at Electronic Data Systems Corporation (EDS, now part of Hewlett-Packard Company), an information technology and other business process outsourcing company, where she held multiple senior-level financial and operational roles, including four presidencies during her 26 years at EDS.
Ms. Eberhart is a director of Anadarko Petroleum Corporation, an exploration and production company; Ciber, Inc., a global information technology consulting, services and outsourcing company; and LPL Financial Holdings Inc., a financial advisory and research firm. She is a former director of CDI Corporation, Advanced Micro Devices, Inc., a designer and integrator of technologies powering intelligent devices, and Fluor Corporation, a provider of engineering, procurement, construction, maintenance, and project management.
Peter J. Fluor is Chairman of the Board and Chief Executive Officer of Texas Crude Energy, LLC, a private, independent oil and gas exploration company. Mr. Fluor has been employed by Texas Crude Energy, LLC since 1972 in positions of increasing responsibilities, including President and Chief Financial Officer.
We believe Mr. Fluor’s qualifications to serve on the Board include, among others, CEO and executive leadership, financial oversight responsibilities, and energy/oilfield equipment. Inservices, international operations, and corporate governance experience. He offers the early 1940’s, CIW enteredperspective of an experienced leader and executive in the market for defense-related equipment becomingenergy industry.
Mr. Fluor is a major supplierdirector of anti-submarineFluor Corporation, a provider of engineering, procurement, construction, maintenance and other naval armaments toproject management, and is currently its Lead Independent Director. He is also a director of Anadarko Petroleum Corporation and a former director of Devon Energy Corporation, both exploration and production companies.
Douglas L. Foshee is currently the owner of Sallyport Investments, LLC, a private investment firm. He was the Chairman and Chief Executive Officer of El Paso Corporation, formerly a natural gas and pipeline company, and a director of El Paso Pipeline GP Company, L.L.C., the general partner of El Paso’s publicly traded master limited partnership, El Paso Pipeline Partners, L.P., until May 2012 when El Paso was acquired by Kinder Morgan, Inc. He also served as a Trustee of AIG Credit Facility Trust, overseeing the U.S. Navy. CIW also became a leading supplier of forged metal productsgovernment’s equity interest in American International Group for both defense and oilfield applications replacing less durable cast metal componentsthe benefit of the day. CIW subsequently expanded into various other flow control, valveU.S. Treasury, and pressure control equipment businesses acquiring Joy Petroleum Equipment and McEvoy-Willis wellhead equipment prior to its acquisition by Cooper Industries, Inc. in 1989.
We believe Mr. Foshee’s qualifications to serve on the Board include, among others, CEO and liabilitiesexecutive leadership, financial oversight responsibilities, and energy/oilfield services, international operations, and corporate governance experience. He provides significant experience in the oil and gas industry and a significant depth of its Petroleumfinancial and Industrial Equipment segment into this new entity. Following this,corporate governance knowledge. He has held leadership and executive positions in the Company operated as a wholly-owned subsidiaryoilfield services sector, in which Cameron competes, and in finance.
Rodolfo Landim is the Controlling Partner and Managing Director of Cooper Industries from 1994 until June 30, 1995, when it was spun-off as a separate stand-alone company and renamed Cooper Cameron Corporation. The Company subsequently changed its name to Cameron International Corporation in May 2006. Since becoming a stand-alone company, Cameron has made numerous acquisitions, including the 1996 acquisition of Ingram Cactus Company, the 1998 acquisition of Orbit Valve International, Inc., 2004’s acquisition of Petreco International, Inc., the purchase of substantially all of the businesses within the Flow Control segment of Dresser, Inc. in 2005, the acquisition of NATCO Group Inc. (NATCO) in 2009, the purchase of LeTourneau Technologies Drilling Systems, Inc. in 2011 and the acquisition of the TTS Energy Division from TTS Group, ASA in 2012. In 2013, Cameron and Schlumberger Limited joined together to form OneSubsea™Mare Investimentos S.A., a private equity and venture establishedcapital firm that seeks to manufacture and develop products, systemsinvest in supply chain goods and services for the subsea oil and gas market. Cameronsector in Brazil, and Partner and Chief Executive Officer of Ouro Preto Oleo e Gas, a Brazilian oil and gas company integrating business strategy and technical expertise to Brazil’s exploration sector.
We believe Mr. Landim’s qualifications to serve on the Board include, among others, executive leadership, financial oversight responsibilities, international operations, and corporate governance experience. He provides extensive experience in the oil and gas industry, particularly within the oilfield service sector. He has held leadership and executive positions in several Brazilian entities for over 30 years.
Michael E. Patrick served, until his retirement in 2010, as the Vice President and Chief Investment Officer of Meadows Foundation, Inc., a philanthropic association.
We believe Mr. Patrick’s qualifications to serve on the Board include, among others, executive leadership, financial oversight responsibilities, and energy/oilfield services and corporate governance experience.
Mr. Patrick is the founder and a principal of VestU, LLC, a web-based provider of investment education and a former director of BJ Services, an oilfield service company acquired by Baker Hughes International in 2010, and Apptricity Corporation, which provides enterprise applications and services used to automate financial management, advanced logistics, supply chain, and workforce management.
Timothy J. Probert is a 60% ownerSenior Advisor to First Reserve, a global private equity investment firm exclusively focused on energy. During 2014, Mr. Probert served as Strategic Advisor to the Chief Executive Officer of Halliburton and managerwas a member of OneSubsea. Cameron hasHalliburton’s Executive Committee. Prior to that he served as its President of Strategy & Corporate Development from 2011 to 2014 during which time he also sold variousdirected Halliburton’s global technology portfolio. Prior to that, he was President of Halliburton’s Global Business Lines, responsible for overseeing both Halliburton operating divisions from 2010 to 2011. Earlier in his career with Halliburton, he was President of Drilling & Evaluation Division.
We believe Mr. Probert’s qualifications to serve on the Board include, among others, executive leadership, financial oversight responsibilities, over 30 years industry experience in the energy/oilfield services sector and international operations, duringand corporate governance experience.
Mr. Probert is a director of True Oil LLC, a privately owned company with interests in the time itoil and gas industry and Hoover Solutions, a privately owned company providing liquid handling solutions to the energy, petrochemical and other industries. He is a former director of El Paso Corporation, formerly a natural gas and pipeline company, and a former director of Core Laboratories, a provider of reservoir description and reservoir management services.
Jon Erik Reinhardsen is President and Chief Executive Officer of Petroleum Geo-Services ASA (PGS), a company headquartered in Oslo, Norway, that provides a broad range of products to help oil companies find oil and gas reserves offshore worldwide, including seismic and electromagnetic services, data acquisition, processing, reservoir analysis/interpretation and multi-client library data.
We believe Mr. Reinhardsen’s qualifications to serve on the Board include, among others, CEO and executive leadership, financial oversight responsibilities, and energy/oilfield services, international operations, and corporate governance experience. His expertise with large-scale offshore projects while serving in executive positions with PGS and Aker Kvaerner, similar in scope and complexity to Cameron’s, is extremely helpful in Cameron’s evaluation and execution of its subsea systems projects.
Mr. Reinhardsen serves on the boards of AWilhelmsen Management AS, a privately owned investment company located in Oslo, Norway with holdings in shipping, retail, real estate, cruise vacations, and financial investments and Telenor ASA, a Norwegian multinational telecommunications company headquartered in Fornebu, Norway and publicly listed on the Oslo Stock Exchange. He is a former director of Höegh LNG Holdings Ltd. and Höegh Autoliners Holding AS.
Brent J. Smolik has been President, Chief Executive Officer and Chairman of the Board of Directors of EP Energy Corporation, a stand-aloneNorth American oil and natural gas exploration and development company, includingsince August 2013. He previously served as Chairman of the Board of Managers of EPE Acquisition from May 2012 to August 2013. Prior to that, he was Executive Vice President and a member of the Executive Committee of El Paso Corporation since November 2006.
We believe Mr. Smolik’s qualifications to serve on the Board include, among others, his deep knowledge of the exploration and production business, CEO and executive leadership, financial oversight responsibilities, international operations, and corporate governance experience.
Mr. Smolik also serves on the boards of the American Exploration and Production Council and Producers for American Crude Oil Exports.
Bruce W. Wilkinson serves as Cameron’s Lead Director. He was the Chairman, President and Chief Executive Officer of McDermott International, Inc., a leading global engineering and construction company from 2000 to 2008.
We believe Mr. Wilkinson’s qualifications to serve on the Board include, among others, CEO and executive leadership, financial oversight responsibilities, and energy/oilfield services, international operations, and corporate governance experience. In addition to his knowledge of the oilfield services sector and governance matters affecting public corporations, Mr. Wilkinson’s familiarity with the large-scale, complex projects undertaken by McDermott is
valuable to Cameron’s evaluation and execution of its Reciprocating Compression businesssubsea systems projects, which carry similar challenges of scope and complexity.
He serves on the Board of Directors of PNM Resources Inc., a holding company of utilities based in June 2014New Mexico.
Advisory Director
James T. Hackett was a director from 2012 to 2015 when he became an advisory director. He is a partner with Riverstone Holdings LLC, a private energy investment firm. He served as Executive Chairman of the Board of Anadarko Petroleum Corporation, one of the world’s largest independent oil and natural gas exploration and production companies from 2012 to 2013. Prior to that, Mr. Hackett served as Anadarko’s Chief Executive Officer from 2003 and Chairman of the Board from January 2006 to 2012. He also served as Anadarko’s President from 2003 to 2010.
Mr. Hackett is a director of Fluor Corporation and Enterprise Products Partners, LP, both Fortune 500 companies. He also serves on the Board of a closed investment fund traded on the London Stock Exchange called Riverstone Energy Ltd. He is a former director of Halliburton Company and the former Chairman of the Board of the Federal Reserve Bank of Dallas.
Meetings and Meeting Attendance
The Board and its Centrifugal Compression business,Committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. Board and Committee agendas include regularly scheduled executive sessions for the independent directors to meet without management present. The Board’s Lead Director leads the executive sessions of the Board, and the Committee Chairs lead those of the Committees. The Board has delegated various responsibilities and authority to the Board Committees as described in this Form 10-K/A. Committees regularly report on their activities and actions to the full Board. Board members are permitted access to all of our employees outside of Board meetings. Board members periodically visit Cameron sites and events worldwide and meet with local management of those sites and at events.
During 2015, our Board of Directors held twelve meetings; the Audit Committee held seven meetings; the Compensation Committee held six meetings; and the Nominating and Governance Committee held four meetings. Attendance for all such meetings was 97%. Each director is expected to make a reasonable effort to attend all meetings of the Board, all meetings of the Committees of which closed effective January 1, 2015. Today, Cameronsuch director is a Fortune 500 companymember, and our annual meeting of stockholders. All of our directors, except Mr. Landim, attended our 2015 Annual Meeting of Stockholders.
Audit Committee
The Board of Directors maintains a standing Audit Committee. The Audit Committee has been established in accordance with annual revenues of more than $10 billion and a workforce of over 28,000 employees. Cameron also has legal entities in more than 50 countries worldwide.
Each of the current members of the Audit Committee meets the enhanced standards for the independence of audit committee members under SEC rules and New York Stock Exchange Act)listing standards, and is financially literate, as soon as reasonably practicable afterrequired of audit committee members by the Company electronically filesNew York Stock Exchange. The Board has determined that Ms. Eberhart, Mr. Foshee and Mr. Patrick are audit committee financial experts.
The Audit Committee assists the Board in its oversight of the following matters:
· Integrity of our accounting and financial reporting processes and audits of our financial statements, which is more fully described under the caption “Report of the Audit Committee”;
· Our policies and processes with respect to risk assessment and risk management, and particularly our management of major financial risk exposures;
· Our compliance with applicable legal and regulatory requirements;
· Qualifications and independence of our independent registered public accounting firm, or furnishes themthe outside auditors; and
· Performance of our internal audit function and outside auditors.
For a full description of the Audit Committee’s role and particularly its duties and powers, please see the Audit Committee’s Charter available on our website.
Compensation Committee
The Compensation Committee is responsible for the compensation plans and decisions for all our executive officers. Prior to making its compensation decisions regarding the CEO, the Compensation Committee is provided the performance review of the CEO conducted annually by the Nominating and Governance Committee and confers with other independent directors in Executive Session. The Compensation Committee also reviews and approves the compensation of the other executive officers, and, in addition, oversees compensation programs for non-executive officers and employees and supervises and administers our compensation and benefits policies and plans. The Compensation Committee assists the Board in making decisions regarding compensation arrangements and benefit programs for our non-employee director compensation program by considering and making recommendations to the United States SecuritiesBoard. The Compensation Committee is assisted in these matters by an independent compensation consultant, hired by and serving at the pleasure of the Committee.
A description of the Committee’s role in determining executive compensation, including the CEO’s compensation, and its use of an independent compensation consultant, is contained in the “Executive Compensation — Compensation Discussion and Analysis” portion of Item 11 of this Form 10-K/A. A description of the Committee’s role in determining non-employee director compensation is contained under the caption “Director Compensation.”
The Compensation Committee also oversees executive development and succession planning, though sharing the responsibility for succession planning for the CEO with the Nominating and Governance Committee.
Nominating and Governance Committee
The Nominating and Governance Committee is responsible for, among other things, overseeing the development and periodic review of our policies and practices relating to corporate governance, including our Corporate Governance Principles, and for monitoring compliance with corporate governance rules and regulations, including our Code of Ethics for Directors and our Policy on Related-Person Transactions, and serves as our nominating committee. The Nominating and Governance Committee annually reviews the performance of the CEO, and assists the Board with succession planning for the CEO position. The Nominating and Governance Committee is responsible
for reviewing and recommending to the Board director nominees, recommending committee assignments and leading the conduct of annual evaluations of the Board and its Committees and individual directors.
Board’s Role in Risk Oversight
Our Board has and exercises ultimate oversight responsibility with respect to enterprise risk assessment and to the management of the strategic, operational, financial and legal risks facing our company and its operations and financial condition. The Board is involved in setting our business and financial strategies and establishing what constitutes the appropriate level of risk for us and our business segments. Various committees of the Board provide assistance to the Board in its oversight of, among other things, risk assessment and risk management.
·Our Audit Committee assists the Board in its oversight of our policies relating to risk assessment and risk management generally, with particular focus on our management of major financial risk exposures. The Audit Committee monitors the process by which risk assessment and management is developed and implemented by management and reported to the full Board.
·Our Compensation Committee assists the Board in assessing the nature and degree of risk that may be created by our compensation policies and practices to ensure both their appropriateness in terms of the level of risk-taking, and consistency with our business strategies. In conjunction with its assessment, the Committee, with the assistance of Frederick W. Cook & Co. Inc. (“FWC”), its independent compensation consultant, reviews our compensation policies and practices. That review encompasses each of our incentive plans, eligible participants, performance measurements, parties responsible for certifying performance achievement, and sums that could be earned. The Compensation Committee determined at its February 2016 meeting that our compensation policies and practices do not encourage or create an inappropriate level of risk-taking.
·Our Nominating and Governance Committee provides assistance in the oversight of, among other things, compliance risks, particularly through the oversight of the development of our compliance programs, policies and procedures, as well as through the periodic review of their effectiveness.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Commission (the SEC). Information filed by the CompanyAct requires our directors and executive officers, and persons who own more than ten percent of our Common Stock, to file with the SEC is also available at www.sec.gov or may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information regarding operationsNYSE initial reports of beneficial ownership on Form 3 and changes in such ownership on Forms 4 and 5. Based on a review of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
Code of OneSubsea in 2013 allows the Company to bring together Schlumberger’s expertise in subsea processing and platform integration with Cameron’s capabilities in subsea equipment to provide customers with the ability to greatly increase their subsea reservoir recovery rates.
Our Code of Ethics for 58%, 44% and 47% of each respective year’s total costs.
| Americas | Asia/Pacific and Middle East | Europe/Africa/ Caspian/Russia | Total | |||||||||||||
Subsea ― | ||||||||||||||||
| Number of locations | 53 | 10 | 29 | 92 | ||||||||||||
Square footage: | ||||||||||||||||
| Owned | 3,911,480 | – | 986,536 | 4,898,016 | ||||||||||||
| Leased | 969,444 | 767,303 | 1,293,873 | 3,030,620 | ||||||||||||
Surface ― | ||||||||||||||||
| Number of locations | 74 | 24 | 27 | 125 | ||||||||||||
Square footage: | ||||||||||||||||
| Owned | 4,060,478 | – | 1,533,145 | 5,593,623 | ||||||||||||
| Leased | 881,472 | 1,543,367 | 287,288 | 2,712,127 | ||||||||||||
Drilling ― | ||||||||||||||||
| Number of locations | 34 | 5 | 10 | 49 | ||||||||||||
Square footage: | ||||||||||||||||
| Owned | 1,809,235 | – | 446,681 | 2,255,916 | ||||||||||||
| Leased | 29,983,104 | 535,238 | 227,236 | 30,745,578 | ||||||||||||
V&M ― | ||||||||||||||||
| Number of locations | 61 | 20 | 12 | 93 | ||||||||||||
Square footage: | ||||||||||||||||
| Owned | 1,371,292 | 18,729 | 747,488 | 2,137,509 | ||||||||||||
| Leased | 1,392,037 | 755,896 | 206,562 | 2,354,495 | ||||||||||||
| Corporate ― | ||||||||||||||||
| Number of locations | 11 | 2 | 6 | 19 | ||||||||||||
Square footage: | ||||||||||||||||
| Owned | 3,247,263 | – | – | 3,247,263 | ||||||||||||
| Leased | 225,592 | 38,904 | 73,536 | 338,032 | ||||||||||||
| Total ― | ||||||||||||||||
| Number of locations | 233 | 61 | 84 | 378 | ||||||||||||
Square footage: | ||||||||||||||||
| Owned | 14,399,748 | 18,729 | 3,713,850 | 18,132,327 | ||||||||||||
| Leased | 33,451,649 | 3,640,708 | 2,088,495 | 39,180,852 | ||||||||||||
| Price Range ($) | ||||||||||||
| High | Low | Last | ||||||||||
| 2014 | ||||||||||||
| First Quarter | $ | 64.38 | $ | 56.51 | $ | 61.77 | ||||||
| Second Quarter | 68.54 | 60.63 | 67.71 | |||||||||
| Third Quarter | 74.89 | 65.88 | 66.38 | |||||||||
| Fourth Quarter | 66.88 | 44.43 | �� | 49.95 | ||||||||
| Price Range ($) | ||||||||||||
| High | Low | Last | ||||||||||
| 2013 | ||||||||||||
| First Quarter | $ | 67.42 | $ | 56.40 | $ | 65.20 | ||||||
| Second Quarter | 65.51 | 57.72 | 61.16 | |||||||||
| Third Quarter | 66.12 | 54.83 | 58.37 | |||||||||
| Fourth Quarter | 66.09 | 52.50 | 59.53 | |||||||||
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of repurchase program | Maximum number of shares that may yet be purchased under repurchase program(1) | ||||||||||||
| 10/1/14-10/31/14 | 1,611,425 | $ | 59.39 | 53,617,663 | 9,559,708 | |||||||||||
| 11/1/14-11/30/14 | 1,096,675 | $ | 54.98 | 54,714,338 | 9,925,578 | |||||||||||
| 12/1/14-12/31/14 | 673,577 | $ | 48.32 | 55,387,915 | 9,538,245 | |||||||||||
| Total | 3,381,677 | $ | 55.76 | 55,387,915 | 9,538,245 | |||||||||||
| Year Ended December 31, | ||||||||||||||||||||
(dollars in millions, except per share data) | 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
Income Statement Data: | ||||||||||||||||||||
| Revenues | $ | 10,381 | $ | 9,138 | $ | 7,795 | $ | 6,348 | $ | 5,644 | ||||||||||
| Costs and expenses: | ||||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown separately below) | 7,464 | 6,518 | 5,522 | 4,422 | 3,885 | |||||||||||||||
| Selling and administrative expenses | 1,287 | 1,275 | 1,070 | 912 | 785 | |||||||||||||||
| Depreciation and amortization | 348 | 298 | 238 | 191 | 187 | |||||||||||||||
| Interest, net | 129 | 100 | 90 | 84 | 78 | |||||||||||||||
| Other costs | 73 | 92 | 33 | 177 | 47 | |||||||||||||||
| Total costs and expenses | 9,301 | 8,283 | 6,953 | 5,786 | 4,982 | |||||||||||||||
| Income from continuing operations before income taxes | 1,080 | 855 | 842 | 562 | 662 | |||||||||||||||
| Income tax provision | (258 | ) | (196 | ) | (157 | ) | (97 | ) | (146 | ) | ||||||||||
| Income from continuing operations | 822 | 659 | 685 | 465 | 516 | |||||||||||||||
| Income from discontinued operations, net of income taxes | 26 | 65 | 66 | 57 | 47 | |||||||||||||||
| Net income | 848 | 724 | 751 | 522 | 563 | |||||||||||||||
| Less: Net income attributable to noncontrolling interests | 37 | 25 | – | – | – | |||||||||||||||
| Net income attributable to Cameron stockholders | $ | 811 | $ | 699 | $ | 751 | $ | 522 | $ | 563 | ||||||||||
| Amounts attributable to Cameron stockholders: | ||||||||||||||||||||
| Income from continuing operations | $ | 785 | $ | 634 | $ | 685 | $ | 465 | $ | 516 | ||||||||||
| Income from discontinued operations | 26 | 65 | 66 | 57 | 47 | |||||||||||||||
| Net income attributable to Cameron stockholders | $ | 811 | $ | 699 | $ | 751 | $ | 522 | $ | 563 | ||||||||||
| Earnings per share attributable to Cameron stockholders: | ||||||||||||||||||||
| Basic - | ||||||||||||||||||||
| Continuing operations | $ | 3.85 | $ | 2.62 | $ | 2.78 | $ | 1.90 | $ | 2.12 | ||||||||||
| Discontinued operations | .13 | .27 | .27 | .23 | .19 | |||||||||||||||
| Basic earnings per share | $ | 3.98 | $ | 2.89 | $ | 3.05 | $ | 2.13 | $ | 2.31 | ||||||||||
| Diluted - | ||||||||||||||||||||
| Continuing operations | $ | 3.83 | $ | 2.60 | $ | 2.76 | $ | 1.87 | $ | 2.08 | ||||||||||
| Discontinued operations | .13 | .27 | .27 | .23 | .19 | |||||||||||||||
| Diluted earnings per share | $ | 3.96 | $ | 2.87 | $ | 3.03 | $ | 2.10 | $ | 2.27 | ||||||||||
Balance Sheet Data (at the end of period): | ||||||||||||||||||||
| Total assets | $ | 12,892 | $ | 14,249 | $ | 11,158 | $ | 9,362 | $ | 8,005 | ||||||||||
| Cameron stockholders’ equity | $ | 4,555 | $ | 5,852 | $ | 5,566 | $ | 4,707 | $ | 4,392 | ||||||||||
| Long-term debt | $ | 2,819 | $ | 2,563 | $ | 2,047 | $ | 1,574 | $ | 773 | ||||||||||
| Other long-term obligations | $ | 360 | $ | 510 | $ | 376 | $ | 400 | $ | 266 | ||||||||||
| Region | 2014 | 2013 | 2012 | |||||||||
| North America | $ | 3,739 | $ | 3,557 | $ | 3,514 | ||||||
| South America | 783 | 772 | 557 | |||||||||
| Asia, including Middle East | 2,334 | 2,134 | 1,681 | |||||||||
| Africa | 1,541 | 966 | 890 | |||||||||
| Europe | 1,816 | 1,415 | 807 | |||||||||
| Other | 168 | 294 | 346 | |||||||||
| Total revenues | $ | 10,381 | $ | 9,138 | $ | 7,795 | ||||||
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Revenues | 100 | % | 100 | % | 100 | % | ||||||
| Costs and expenses: | ||||||||||||
Cost of sales (exclusive of depreciation and amortization shown separately below) | 71.9 | 71.3 | 70.8 | |||||||||
| Selling and administrative expenses | 12.4 | 13.9 | 13.7 | |||||||||
| Depreciation and amortization | 3.4 | 3.3 | 3.1 | |||||||||
| Interest, net | 1.2 | 1.1 | 1.2 | |||||||||
Other costs (see Note 4) | 0.7 | 1.0 | 0.4 | |||||||||
| Total costs and expenses | 89.6 | 90.6 | 89.2 | |||||||||
| Income from continuing operations before income taxes | 10.4 | 9.4 | 10.8 | |||||||||
| Income tax provision | (2.5 | ) | (2.2 | ) | (2.0 | ) | ||||||
| Income from continuing operations | 7.9 | 7.2 | 8.8 | |||||||||
| Income from discontinued operations, net of income taxes | 0.3 | 0.7 | 0.8 | |||||||||
| Net income | 8.2 | 7.9 | 9.6 | |||||||||
| Less: Net income attributable to noncontrolling interests | 0.4 | 0.3 | - | |||||||||
| Net income attributable to Cameron stockholders | 7.8 | % | 7.6 | % | 9.6 | % | ||||||
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
| 2014 | 2013 | Amount | % | |||||||||||||
Drilling activity (average number of working rigs during period)1: | ||||||||||||||||
| United States | 1,861 | 1,761 | 100 | 5.7 | % | |||||||||||
| Canada | 380 | 355 | 25 | 7.0 | % | |||||||||||
| Rest of world | 1,337 | 1,296 | 41 | 3.2 | % | |||||||||||
| Global average rig count | 3,578 | 3,412 | 166 | 4.9 | % | |||||||||||
Commodity prices (average of daily U.S. dollar prices per unit during period)2: | ||||||||||||||||
West Texas Intermediate (WTI) Cushing, OK crude spot price (per barrel) | $ | 93.03 | $ | 98.01 | $ | (4.98 | ) | (5.1 | )% | |||||||
Brent crude spot price (per barrel) | $ | 99.01 | $ | 105.76 | $ | (6.75 | ) | (6.4 | )% | |||||||
Henry Hub natural gas spot price (per MMBtu) | $ | 4.35 | $ | 3.73 | $ | 0.62 | 16.6 | % | ||||||||
Twelve-month futures strip price (U.S. dollar amount at period end)2: | ||||||||||||||||
West Texas Intermediate Cushing, OK crude oil contract (per barrel) | $ | 56.57 | $ | 95.79 | $ | (39.22 | ) | (40.9 | )% | |||||||
Brent crude oil contract (per barrel) | $ | 57.33 | $ | 110.80 | $ | (53.47 | ) | (48.3 | )% | |||||||
Henry Hub natural gas contract (per MMBtu) | $ | 3.06 | $ | 4.19 | $ | (1.13 | ) | (27.0 | )% | |||||||
Contracted drillships and semi submersibles by location3: | ||||||||||||||||
| U.S. Gulf of Mexico | 53 | 46 | 7 | 15.2 | % | |||||||||||
| Central and South America | 63 | 73 | (10 | ) | (13.7 | )% | ||||||||||
| Northwestern Europe | 44 | 47 | (3 | ) | (6.4 | )% | ||||||||||
| West Africa | 41 | 39 | 2 | 5.1 | % | |||||||||||
| Southeast Asia and Australia | 28 | 27 | 1 | 3.7 | % | |||||||||||
| Other | 49 | 48 | 1 | 2.1 | % | |||||||||||
| Total | 278 | 280 | (2 | ) | (0.7 | )% | ||||||||||
| Year Ended December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Goodwill impairment | $ | 40 | $ | – | ||||
| Litigation costs | 11 | 3 | ||||||
| Loss on disposal of non-core assets | 10 | – | ||||||
| Impairment of identifiable intangible assets | 4 | – | ||||||
| Cost for early retirement of debt | 3 | – | ||||||
| OneSubsea formation and other acquisition and integration costs | 2 | 60 | ||||||
| International pension curtailment gains, net | (8 | ) | – | |||||
| Gain from remeasurement of prior interest in equity method investment | (8 | ) | – | |||||
| Mark-to-market impact on currency derivatives not designated as accounting hedges | 8 | 1 | ||||||
| Currency devaluation | – | 10 | ||||||
| Severance, restructuring and other costs | 11 | 18 | ||||||
| Total other costs | $ | 73 | $ | 92 | ||||
| Year Ended December 31, | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||
(dollars in millions) | Tax Provision | Tax Rate | Tax Provision | Tax Rate | ||||||||||||
| Provision based on statutory rates in jurisdictions where income is earned | $ | 254 | 23.5 | % | $ | 193 | 22.5 | % | ||||||||
Adjustments to income tax provision: | ||||||||||||||||
| Recognition of certain historical tax benefits as prior uncertainty regarding those benefits has been resolved | (5 | ) | (0.5 | ) | (16 | ) | (1.9 | ) | ||||||||
| Tax effect of goodwill impairment | 9 | 0.9 | – | – | ||||||||||||
| Finalization of prior year returns | 17 | 1.6 | 29 | 3.4 | ||||||||||||
| Tax effects of changes in legislation | 2 | 0.2 | (10 | ) | (1.1 | ) | ||||||||||
| Accrual adjustments and other | (19 | ) | (1.8 | ) | – | – | ||||||||||
| Tax provision | $ | 258 | 23.9 | % | $ | 196 | 22.9 | % | ||||||||
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
(dollars in millions) | 2014 | 2013 | $ | % | ||||||||||||
| Revenues | $ | 3,067 | $ | 2,813 | $ | 254 | 9.0 | % | ||||||||
| Segment operating income before interest and income taxes | $ | 207 | $ | 152 | $ | 55 | 36.2 | % | ||||||||
| Segment operating income before interest and income taxes as a percent of revenues | 6.7 | % | 5.4 | % | N/A | 1.3 | pts. | |||||||||
| Orders | $ | 2,356 | $ | 4,405 | $ | (2,049 | ) | (46.5 | )% | |||||||
Backlog (at period-end) | $ | 4,263 | $ | 4,958 | $ | (695 | ) | (14.0 | )% | |||||||
Year Ended December 31, | Increase | |||||||||||||||
(dollars in millions) | 2014 | 2013 | $ | % | ||||||||||||
| Revenues | $ | 2,411 | $ | 2,077 | $ | 334 | 16.1 | % | ||||||||
| Segment operating income before interest and income taxes | $ | 427 | $ | 367 | $ | 60 | 16.3 | % | ||||||||
| Segment operating income before interest and income taxes as a percent of revenues | 17.7 | % | 17.7 | % | N/A | 0.0 | pts. | |||||||||
| Orders | $ | 2,480 | $ | 2,372 | $ | 108 | 4.6 | % | ||||||||
Backlog (at period-end) | $ | 1,025 | $ | 963 | $ | 62 | 6.4 | % | ||||||||
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
(dollars in millions) | 2014 | 2013 | $ | % | ||||||||||||
| Revenues | $ | 3,049 | $ | 2,327 | $ | 722 | 31.0 | % | ||||||||
| Segment operating income before interest and income taxes | $ | 474 | $ | 311 | $ | 163 | 52.4 | % | ||||||||
| Segment operating income before interest and income taxes as a percent of revenues | 15.5 | % | 13.4 | % | N/A | 2.1 | pts. | |||||||||
| Orders | $ | 2,449 | $ | 2,803 | $ | (354 | ) | (12.6 | )% | |||||||
Backlog (at period-end) | $ | 3,327 | $ | 4,141 | $ | (814 | ) | (19.7 | )% | |||||||
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
(dollars in millions) | 2014 | 2013 | $ | % | ||||||||||||
| Revenues | $ | 2,125 | $ | 2,105 | $ | 20 | 1.0 | % | ||||||||
| Segment operating income before interest and income taxes | $ | 393 | $ | 414 | $ | (21 | ) | (5.1 | )% | |||||||
| Segment operating income before interest and income taxes as a percent of revenues | 18.5 | % | 19.7 | % | N/A | (1.2 | ) pts. | |||||||||
| Orders | $ | 2,091 | $ | 2,086 | $ | 5 | 0.2 | % | ||||||||
Backlog (at period-end) | $ | 921 | $ | 1,017 | $ | (96 | ) | (9.4 | )% | |||||||
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
| 2013 | 2012 | Amount | % | |||||||||||||
Drilling activity (average number of working rigs during period)1: | ||||||||||||||||
| United States | 1,761 | 1,919 | (158 | ) | (8.2 | )% | ||||||||||
| Canada | 355 | 365 | (10 | ) | (2.7 | )% | ||||||||||
| Rest of world | 1,296 | 1,234 | 62 | 5.0 | % | |||||||||||
| Global average rig count | 3,412 | 3,518 | (106 | ) | (3.0 | )% | ||||||||||
Commodity prices (average of daily U.S. dollar prices per unit during period)2: | ||||||||||||||||
West Texas Intermediate Cushing, OK crude spot price (per barrel) | $ | 98.01 | $ | 94.10 | $ | 3.91 | 4.2 | % | ||||||||
Brent crude spot price (per barrel) | $ | 105.76 | $ | 109.06 | $ | (3.30 | ) | (3.0 | )% | |||||||
Henry Hub natural gas spot price (per MMBtu) | $ | 3.73 | $ | 2.75 | $ | 0.98 | 35.6 | % | ||||||||
Twelve-month futures strip price (U.S. dollar amount at period end)2: | ||||||||||||||||
West Texas Intermediate Cushing, OK crude oil contract (per barrel) | $ | 95.79 | $ | 93.19 | $ | 2.60 | 2.8 | % | ||||||||
Brent crude oil contract (per barrel) | $ | 110.80 | $ | 111.11 | $ | (0.31 | ) | (0.3 | )% | |||||||
Henry Hub natural gas contract (per MMBtu) | $ | 4.19 | $ | 3.60 | $ | 0.59 | 16.4 | % | ||||||||
Contracted drillships and semi submersibles by location: 3 | ||||||||||||||||
| U.S. Gulf of Mexico | 46 | 40 | 6 | 15.0 | % | |||||||||||
| Central and South America | 73 | 84 | (11 | ) | (13.1 | )% | ||||||||||
| Northwestern Europe | 47 | 45 | 2 | 4.4 | % | |||||||||||
| West Africa | 39 | 32 | 7 | 21.9 | % | |||||||||||
| Southeast Asia and Australia | 27 | 21 | 6 | 28.6 | % | |||||||||||
| Other | 48 | 47 | 1 | 2.1 | % | |||||||||||
| Total | 280 | 269 | 11 | 4.1 | % | |||||||||||
| Year Ended December 31, | ||||||||
(dollars in millions) | 2013 | 2012 | ||||||
| OneSubsea formation and other acquisition and integration costs | $ | 60 | $ | 16 | ||||
| Currency devaluation | 10 | – | ||||||
| Impairment of identifiable intangible assets | – | 18 | ||||||
| International pension settlement costs | – | 7 | ||||||
| Litigation costs | 3 | 2 | ||||||
| Mark-to-market impact on currency derivatives not designated as accounting hedges | 1 | (16 | ) | |||||
| Severance, restructuring and other costs | 18 | 6 | ||||||
| Total other costs | $ | 92 | $ | 33 | ||||
| Year Ended December 31, | ||||||||||||||||
| 2013 | 2012 | |||||||||||||||
(dollars in millions) | Tax Provision | Tax Rate | Tax Provision | Tax Rate | ||||||||||||
| Provision based on statutory rates in jurisdictions where income is earned | $ | 193 | 22.5 | % | $ | 206 | 24.4 | % | ||||||||
Adjustments to income tax provision: | ||||||||||||||||
| Recognition of certain historical tax benefits as prior uncertainty regarding those benefits has been resolved | (16 | ) | (1.9 | ) | (22 | ) | (2.6 | ) | ||||||||
| Finalization of prior year returns | 29 | 3.4 | (21 | ) | (2.5 | ) | ||||||||||
| Tax effects of changes in legislation | (10 | ) | (1.1 | ) | (2 | ) | (0.2 | ) | ||||||||
| Accrual adjustments and other | – | – | (4 | ) | (0.5 | ) | ||||||||||
| Tax provision | $ | 196 | 22.9 | % | $ | 157 | 18.6 | % | ||||||||
Year Ended December 31, | Increase | |||||||||||||||
(dollars in millions) | 2013 | 2012 | $ | % | ||||||||||||
| Revenues | $ | 2,813 | $ | 2,061 | $ | 752 | 36.5 | % | ||||||||
| Segment operating income before interest and income taxes | $ | 152 | $ | 72 | $ | 80 | 111.1 | % | ||||||||
| Segment operating income before interest and income taxes as a percent of revenues | 5.4 | % | 3.5 | % | N/A | 1.9 | pts. | |||||||||
| Orders | $ | 4,405 | $ | 2,427 | $ | 1,978 | 81.5 | % | ||||||||
Backlog (at period-end) | $ | 4,958 | $ | 2,730 | $ | 2,228 | 81.6 | % | ||||||||
Year Ended December 31, | Increase | |||||||||||||||
(dollars in millions) | 2013 | 2012 | $ | % | ||||||||||||
| Revenues | $ | 2,077 | $ | 1,859 | $ | 218 | 11.7 | % | ||||||||
| Segment operating income before interest and income taxes | $ | 367 | $ | 315 | $ | 52 | 16.5 | % | ||||||||
| Segment operating income before interest and income taxes as a percent of revenues | 17.7 | % | 16.9 | % | N/A | 0.8 | pts. | |||||||||
| Orders | $ | 2,372 | $ | 2,075 | $ | 297 | 14.3 | % | ||||||||
Backlog (at period-end) | $ | 963 | $ | 667 | $ | 296 | 44.4 | % | ||||||||
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
(dollars in millions) | 2013 | 2012 | $ | % | ||||||||||||
| Revenues | $ | 2,327 | $ | 1,807 | $ | 520 | 28.8 | % | ||||||||
| Segment operating income before interest and income taxes | $ | 311 | $ | 329 | $ | (18 | ) | (5.5 | )% | |||||||
| Segment operating income before interest and income taxes as a percent of revenues | 13.4 | % | 18.2 | % | N/A | (4.8 | ) pts. | |||||||||
| Orders | $ | 2,803 | $ | 3,578 | $ | (775 | ) | (21.7 | )% | |||||||
Backlog (at period-end) | $ | 4,141 | $ | 3,671 | $ | 470 | 12.8 | % | ||||||||
Year Ended December 31, | Increase (Decrease) | |||||||||||||||
(dollars in millions) | 2013 | 2012 | $ | % | ||||||||||||
| Revenues | $ | 2,105 | $ | 2,168 | $ | (63 | ) | (2.9 | )% | |||||||
| Segment operating income before interest and income taxes | $ | 414 | $ | 396 | $ | 18 | 4.5 | % | ||||||||
| Segment operating income before interest and income taxes as a percent of revenues | 19.7 | % | 18.3 | % | N/A | 1.4 | pts. | |||||||||
| Orders | $ | 2,086 | $ | 2,104 | $ | (18 | ) | (0.9 | )% | |||||||
Backlog (at period-end) | $ | 1,017 | $ | 1,051 | $ | (34 | ) | (3.2 | )% | |||||||
(dollars in millions) | Increase (decrease) in 2015 pre-tax pension expense | Increase (decrease) in PBO at December 31, 2014 | ||||||
| Change in Assumption: | ||||||||
| 25 basis point decrease in discount rate | $ | (1 | ) | $ | 15 | |||
| 25 basis point increase in discount rate | $ | (4 | ) | $ | (14 | ) | ||
| 25 basis point decrease in expected return on assets | $ | (1 | ) | $ | – | |||
| 25 basis point increase in expected return on assets | $ | (3 | ) | $ | – | |||
| (dollars in millions) | Payments Due by Period | |||||||||||||||||||
| Contractual Obligations | Total | Less Than 1 Year | 1 – 3 Years | 4 – 5 Years | After 5 Years | |||||||||||||||
| Debt, including interest payments (a) | $ | 4,728 | $ | 373 | $ | 763 | $ | 655 | $ | 2,937 | ||||||||||
| Capital lease obligations (b) | 120 | 17 | 27 | 14 | 62 | |||||||||||||||
| Operating leases | 742 | 102 | 168 | 122 | 350 | |||||||||||||||
| Purchase obligations (c) | 1,778 | 1,743 | 33 | 2 | − | |||||||||||||||
| Minimum required contributions to funded defined benefit pension plans (d) | 12 | 12 | − | − | − | |||||||||||||||
| Benefit payments expected for unfunded pension and postretirement benefit plans (U.S. only) | 11 | 2 | 3 | 2 | 4 | |||||||||||||||
| Liabilities for uncertain tax benefits (e) | 96 | 96 | − | − | − | |||||||||||||||
| Total contractual cash obligations | $ | 7,487 | $ | 2,345 | $ | 994 | $ | 795 | $ | 3,353 | ||||||||||
(dollars in millions) | Amount of Commitment Expiration by Period | |||||||||||||||||||
Other Unrecorded Commercial Commitments and Off-Balance Sheet Arrangements | Total Commitment | Less Than 1 Year | 1 - 3 Years | 4 – 5 Years | After 5 Years | |||||||||||||||
| Committed lines of credit available as of year-end | $ | 1,740 | $ | 136 | $ | 1,604 | $ | – | $ | − | ||||||||||
| Standby letters of credit and bank guarantees | 1,108 | 457 | 392 | 240 | 19 | |||||||||||||||
| Financial letters of credit | 45 | 13 | – | 32 | – | |||||||||||||||
| Insurance bonds | 28 | 28 | – | – | – | |||||||||||||||
| Other financial guarantees | 7 | 1 | – | – | 6 | |||||||||||||||
| Total commercial commitments | $ | 2,928 | $ | 635 | $ | 1,996 | $ | 272 | $ | 25 | ||||||||||
| Notional Amount - Buy | Notional Amount - Sell | |||||||||||||||||||||||||||
(in millions) | 2015 | 2016 | 2017 | Total | 2015 | 2016 | Total | |||||||||||||||||||||
| Foreign exchange forward contracts - | ||||||||||||||||||||||||||||
Notional currency in: | ||||||||||||||||||||||||||||
| Euro | 200 | 14 | – | 214 | (10 | ) | (1 | ) | (11 | ) | ||||||||||||||||||
| Malaysian ringgit | 377 | 51 | – | 428 | (29 | ) | – | (29 | ) | |||||||||||||||||||
| Norwegian krone | 895 | 117 | 4 | 1,016 | (96 | ) | (44 | ) | (140 | ) | ||||||||||||||||||
| Pound Sterling | 110 | 5 | – | 115 | (22 | ) | (1 | ) | (23 | ) | ||||||||||||||||||
| U.S. dollar | 60 | – | – | 60 | (635 | ) | (47 | ) | (682 | ) | ||||||||||||||||||
| Foreign exchange option contracts - | ||||||||||||||||||||||||||||
Notional currency in: | ||||||||||||||||||||||||||||
| U.S. dollar | 87 | – | – | 87 | – | – | – | |||||||||||||||||||||
| Year Ended December 31, | ||||||||||||
(dollars in millions, except per share data) | 2014 | 2013 | 2012 | |||||||||
| Revenues | $ | 10,381 | $ | 9,138 | $ | 7,795 | ||||||
| Costs and expenses: | ||||||||||||
Cost of sales (exclusive of depreciation and amortization shown separately below) | 7,464 | 6,518 | 5,522 | |||||||||
| Selling and administrative expenses | 1,287 | 1,275 | 1,070 | |||||||||
| Depreciation and amortization | 348 | 298 | 238 | |||||||||
| Interest, net | 129 | 100 | 90 | |||||||||
Other costs (see Note 4) | 73 | 92 | 33 | |||||||||
| Total costs and expenses | 9,301 | 8,283 | 6,953 | |||||||||
| Income from continuing operations before income taxes | 1,080 | 855 | 842 | |||||||||
| Income tax provision | (258 | ) | (196 | ) | (157 | ) | ||||||
| Income from continuing operations | 822 | 659 | 685 | |||||||||
| Income from discontinued operations, net of income taxes | 26 | 65 | 66 | |||||||||
| Net income | 848 | 724 | 751 | |||||||||
| Less: Net income attributable to noncontrolling interests | 37 | 25 | – | |||||||||
| Net income attributable to Cameron stockholders | $ | 811 | $ | 699 | $ | 751 | ||||||
| Amounts attributable to Cameron stockholders: | ||||||||||||
| Income from continuing operations | $ | 785 | $ | 634 | $ | 685 | ||||||
| Income from discontinued operations | 26 | 65 | 66 | |||||||||
| Net income attributable to Cameron stockholders | $ | 811 | $ | 699 | $ | 751 | ||||||
Earnings per share attributable to Cameron stockholders: | ||||||||||||
| Basic - | ||||||||||||
| Continuing operations | $ | 3.85 | $ | 2.62 | $ | 2.78 | ||||||
| Discontinued operations | .13 | .27 | .27 | |||||||||
| Basic earnings per share | $ | 3.98 | $ | 2.89 | $ | 3.05 | ||||||
| Diluted - | ||||||||||||
| Continuing operations | $ | 3.83 | $ | 2.60 | $ | 2.76 | ||||||
| Discontinued operations | .13 | .27 | .27 | |||||||||
| Diluted earnings per share | $ | 3.96 | $ | 2.87 | $ | 3.03 | ||||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Net income | $ | 848 | $ | 724 | $ | 751 | ||||||
| Foreign currency translation gain (loss) | (526 | ) | (70 | ) | 75 | |||||||
Gain (loss) on derivatives recognized in other comprehensive income: | ||||||||||||
| Pre-tax | (109 | ) | 19 | 15 | ||||||||
| Tax effect | 33 | (5 | ) | (5 | ) | |||||||
(Gain) loss on derivatives reclassified from accumulated other comprehensive income to: | ||||||||||||
| Revenues | 7 | (2 | ) | 6 | ||||||||
| Cost of sales | 6 | (5 | ) | 4 | ||||||||
| Tax effect | (5 | ) | 2 | (3 | ) | |||||||
Actuarial gains (losses) recognized in other comprehensive income: | ||||||||||||
| Pre-tax | (43 | ) | 25 | (43 | ) | |||||||
| Tax effect | 8 | (12 | ) | 9 | ||||||||
| Curtailment and settlement (gains) losses recognized: | ||||||||||||
| Pre-tax | (11 | ) | – | – | ||||||||
| Tax effect | 3 | – | – | |||||||||
Amortization to selling and administrative expenses of: | ||||||||||||
| Prior service credits | (2 | ) | (3 | ) | (1 | ) | ||||||
| Net actuarial losses | 6 | 7 | 5 | |||||||||
| Tax effect | (1 | ) | – | (1 | ) | |||||||
| Comprehensive income | 214 | 680 | 812 | |||||||||
| Comprehensive income attributable to noncontrolling interest: | ||||||||||||
| Net income | 37 | 25 | – | |||||||||
| Foreign currency translation gain (loss) | (147 | ) | 24 | – | ||||||||
| Gain (loss) on derivatives recognized in other comprehensive income, net of tax | (24 | ) | 7 | – | ||||||||
| (Gain) loss on derivatives reclassified from accumulated other comprehensive income, net of tax | 4 | (1 | ) | – | ||||||||
| Actuarial (gains) loss recognized in other comprehensive income, net of tax | (4 | ) | (26 | ) | – | |||||||
| Curtailment and settlement gains (losses) recognized in other comprehensive income, net of tax | (5 | ) | – | – | ||||||||
| Amortization to selling and administrative expenses, net of tax | 2 | 2 | – | |||||||||
| Comprehensive income (loss) attributable to noncontrolling interest | (137 | ) | 31 | – | ||||||||
| Comprehensive income attributable to Cameron | $ | 351 | $ | 649 | $ | 812 | ||||||
| December 31, | ||||||||
(dollars in millions, except shares and per share data) | 2014 | 2013 | ||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 1,513 | $ | 1,813 | ||||
| Short-term investments | 113 | 41 | ||||||
| Receivables, net | 2,389 | 2,719 | ||||||
| Inventories, net | 2,929 | 3,133 | ||||||
| Other current assets | 391 | 463 | ||||||
| Assets of discontinued operations | 217 | − | ||||||
| Total current assets | 7,552 | 8,169 | ||||||
| Plant and equipment, net | 1,964 | 2,037 | ||||||
| Goodwill | 2,461 | 2,925 | ||||||
| Intangibles, net | 728 | 904 | ||||||
| Other assets | 187 | 214 | ||||||
| Total assets | $ | 12,892 | $ | 14,249 | ||||
| Liabilities and stockholders’ equity: | ||||||||
| Short-term debt | $ | 263 | $ | 297 | ||||
| Accounts payable and accrued liabilities | 3,748 | 3,883 | ||||||
| Accrued income taxes | 168 | 80 | ||||||
| Liabilities of discontinued operations | 90 | − | ||||||
| Total current liabilities | 4,269 | 4,260 | ||||||
| Long-term debt | 2,819 | 2,563 | ||||||
| Deferred income taxes | 193 | 277 | ||||||
| Other long-term liabilities | 167 | 233 | ||||||
| Total liabilities | 7,448 | 7,333 | ||||||
| Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
| Common stock, par value $.01 per share, 400,000,000 shares authorized, 263,111,472 shares issued at December 31, 2014 and 2013 | 3 | 3 | ||||||
| Preferred stock, par value $.01 per share, 10,000,000 shares authorized, no shares issued or outstanding | − | − | ||||||
| Capital in excess of par value | 3,255 | 3,207 | ||||||
| Retained earnings | 5,631 | 4,820 | ||||||
| Accumulated other elements of comprehensive income (loss) | (540 | ) | (80 | ) | ||||
| Less: Treasury stock at cost, 68,139,027 shares at December 31, 2014 and 41,683,164 shares at December 31, 2013 | (3,794 | ) | (2,098 | ) | ||||
| Total Cameron stockholders’ equity | 4,555 | 5,852 | ||||||
| Noncontrolling interests | 889 | 1,064 | ||||||
| Total equity | 5,444 | 6,916 | ||||||
| Total liabilities and stockholders’ equity | $ | 12,892 | $ | 14,249 | ||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
Cash flows from operating activities: | ||||||||||||
| Net income | $ | 848 | $ | 724 | $ | 751 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Gain on sale of Reciprocating Compression business | (95 | ) | – | – | ||||||||
| Depreciation | 296 | 246 | 212 | |||||||||
| Amortization | 64 | 69 | 43 | |||||||||
| Non-cash stock compensation expense | 54 | 54 | 44 | |||||||||
| Gain from remeasurement of prior interest in equity method investment | (8 | ) | – | – | ||||||||
| Deferred income taxes and tax benefit of stock compensation plan transactions | (48 | ) | 11 | (85 | ) | |||||||
Changes in assets and liabilities, net of translation, acquisitions and non-cash items: | ||||||||||||
| Receivables | 166 | (470 | ) | (144 | ) | |||||||
| Inventories | (144 | ) | (367 | ) | (369 | ) | ||||||
| Accounts payable and accrued liabilities | (17 | ) | 556 | 213 | ||||||||
| Other assets and liabilities, net | 77 | 15 | 18 | |||||||||
| Net cash provided by operating activities | 1,193 | 838 | 683 | |||||||||
Cash flows from investing activities: | ||||||||||||
| Proceeds from sales and maturities of short-term investments | 65 | 1,559 | 1,032 | |||||||||
| Purchases of short-term investments | (137 | ) | (1,082 | ) | (1,126 | ) | ||||||
| Capital expenditures | (385 | ) | (520 | ) | (427 | ) | ||||||
| Net proceeds received from sale of Reciprocating Compression business | 547 | – | – | |||||||||
| Other dispositions (acquisitions), net of cash acquired | (7 | ) | (11 | ) | (349 | ) | ||||||
| Proceeds received and cash acquired from formation of OneSubsea™, net of taxes paid of $80 | – | 523 | – | |||||||||
| Proceeds from sales of plant and equipment | 13 | 13 | 27 | |||||||||
| Net cash provided by (used for) investing activities | 96 | 482 | (843 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
| Issuance of senior debt | 500 | 747 | 499 | |||||||||
| Debt issuance costs | (4 | ) | (6 | ) | (3 | ) | ||||||
| Early retirement of senior notes | (253 | ) | – | – | ||||||||
| Short-term loan borrowings (repayments), net | (34 | ) | 46 | (42 | ) | |||||||
| Purchase of treasury stock | (1,747 | ) | (1,531 | ) | (21 | ) | ||||||
| Contributions from noncontrolling interest owners | – | 62 | – | |||||||||
| Distributions to noncontrolling interest owners | (42 | ) | – | – | ||||||||
| Purchases of noncontrolling ownership interests | – | (7 | ) | – | ||||||||
| Proceeds from stock option exercises, net of tax payments from stock compensation plan transactions | 40 | 31 | 12 | |||||||||
| Excess tax benefits from stock compensation plan transactions | 6 | 9 | 11 | |||||||||
| Principal payments on capital leases | (20 | ) | (18 | ) | (11 | ) | ||||||
| Net cash provided by (used for) financing activities | (1,554 | ) | (667 | ) | 445 | |||||||
| Effect of translation on cash | (35 | ) | (26 | ) | 2 | |||||||
| Increase (decrease) in cash and cash equivalents | (300 | ) | 627 | 287 | ||||||||
| Cash and cash equivalents, beginning of year | 1,813 | 1,186 | 899 | |||||||||
| Cash and cash equivalents, end of year | $ | 1,513 | $ | 1,813 | $ | 1,186 | ||||||
| Cameron Stockholders | ||||||||||||||||||||||||||||
(dollars in millions) | Common Stock | Capital in Excess of Par value | Retained Earnings | Accumulated Other Elements of Comprehensive Income (Loss) | Treasury Stock | Non-controlling Interests | Total | |||||||||||||||||||||
| Balance ― December 31, 2011 | $ | 3 | $ | 2,072 | $ | 3,370 | $ | (91 | ) | $ | (647 | ) | $ | – | $ | 4,707 | ||||||||||||
| Net income | – | – | 751 | – | – | – | 751 | |||||||||||||||||||||
| Other comprehensive income (loss) | – | – | – | 61 | – | – | 61 | |||||||||||||||||||||
| Non-cash stock compensation expense | – | 44 | – | – | – | – | 44 | |||||||||||||||||||||
| Purchase of treasury stock | – | – | – | – | (22 | ) | – | (22 | ) | |||||||||||||||||||
| Treasury stock issued under stock compensation plans | – | (34 | ) | – | – | 47 | – | 13 | ||||||||||||||||||||
| Tax benefit of stock compensation plan transactions | – | 12 | – | – | – | – | 12 | |||||||||||||||||||||
| Balance ― December 31, 2012 | 3 | 2,094 | 4,121 | (30 | ) | (622 | ) | – | 5,566 | |||||||||||||||||||
| Formation of OneSubsea, net of tax effects of $90 | – | 1,083 | – | – | – | 927 | 2,010 | |||||||||||||||||||||
| Net income | – | – | 699 | – | – | 25 | 724 | |||||||||||||||||||||
| Other comprehensive income (loss) | – | – | – | (50 | ) | – | 6 | (44 | ) | |||||||||||||||||||
| Non-cash stock compensation expense | – | 54 | – | – | – | – | 54 | |||||||||||||||||||||
| Net change in treasury shares owned by participants in nonqualified deferred compensation plans | – | – | – | – | (2 | ) | – | (2 | ) | |||||||||||||||||||
| Purchase of treasury stock | – | – | – | – | (1,533 | ) | – | (1,533 | ) | |||||||||||||||||||
| Treasury stock issued under stock compensation plans | – | (28 | ) | – | – | 59 | – | 31 | ||||||||||||||||||||
| Tax benefit of stock compensation plan transactions | – | 10 | – | – | – | – | 10 | |||||||||||||||||||||
| Contributions from noncontrolling interest owners | – | – | – | – | – | 75 | 75 | |||||||||||||||||||||
| Purchases of noncontrolling ownership interests | – | – | – | – | – | (7 | ) | (7 | ) | |||||||||||||||||||
| Other noncontrolling interests | – | – | – | – | – | 38 | 38 | |||||||||||||||||||||
| Other | – | (6 | ) | – | – | – | – | (6 | ) | |||||||||||||||||||
| Balance ― December 31, 2013 | 3 | 3,207 | 4,820 | (80 | ) | (2,098 | ) | 1,064 | 6,916 | |||||||||||||||||||
| Net income | – | – | 811 | – | – | 37 | 848 | |||||||||||||||||||||
| Other comprehensive income (loss) | – | – | – | (460 | ) | – | (174 | ) | (634 | ) | ||||||||||||||||||
| Non-cash stock compensation expense | – | 54 | – | – | – | – | 54 | |||||||||||||||||||||
| Purchase of treasury stock | – | – | – | – | (1,750 | ) | – | (1,750 | ) | |||||||||||||||||||
| Treasury stock issued under stock compensation plans | – | (12 | ) | – | – | 54 | – | 42 | ||||||||||||||||||||
| Tax benefit of stock compensation plan transactions | – | 6 | – | – | – | – | 6 | |||||||||||||||||||||
| Purchase of noncontrolling ownership interests | – | – | – | – | – | 4 | 4 | |||||||||||||||||||||
| Distributions to noncontrolling interest owners | – | – | – | – | – | (42 | ) | (42 | ) | |||||||||||||||||||
| Balance ― December 31, 2014 | $ | 3 | $ | 3,255 | $ | 5,631 | $ | (540 | ) | $ | (3,794 | ) | $ | 889 | $ | 5,444 | ||||||||||||
Year Ended December 31, | ||||||||||||
| (dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Revenues | $ | 428 | $ | 701 | $ | 707 | ||||||
| Cost of sales (excluding depreciation and amortization) | (306 | ) | (498 | ) | (503 | ) | ||||||
| All other costs | (94 | ) | (105 | ) | (108 | ) | ||||||
| Gain on sale of the Reciprocating Compression business, before tax | 95 | – | – | |||||||||
| Income before income taxes | 123 | 98 | 96 | |||||||||
| Income tax provision | (97 | ) | (33 | ) | (30 | ) | ||||||
| Income from discontinued operations, net of income taxes | $ | 26 | $ | 65 | $ | 66 | ||||||
| Sales price | $ | 550 | ||
| Net assets sold | (442 | ) | ||
| Transaction and other costs associated with the sale | (13 | ) | ||
| Pre-tax gain | 95 | |||
Tax provision(1) | (88 | ) | ||
| Gain on sale | $ | 7 |
| Accounts receivable | $ | 79 | ||
| Inventory | 122 | |||
| Goodwill | 214 | |||
| All other | 27 | |||
| Net assets sold | $ | 442 |
| (dollars in millions) | December 31, 2014 | |||
| Receivables, net | $ | 37 | ||
| Inventories, net | 86 | |||
| Other current assets | 14 | |||
| Plant and equipment, net | 45 | |||
| Goodwill | 35 | |||
| Assets of discontinued operations | $ | 217 | ||
| Accounts payable, accrued and other current liabilities | $ | 89 | ||
| Other long-term liabilities | 1 | |||
| Liabilities of discontinued operations | $ | 90 | ||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Goodwill impairment | $ | 40 | $ | – | $ | – | ||||||
| Litigation costs | 11 | 3 | 2 | |||||||||
| Loss on disposal of non-core assets | 10 | – | – | |||||||||
| Impairment of identifiable intangible assets | 4 | – | 18 | |||||||||
| Costs for early retirement of debt | 3 | – | – | |||||||||
| OneSubsea formation and other acquisition and integration costs | 2 | 60 | 16 | |||||||||
| International pension curtailment and settlement costs (credits), net | (8 | ) | – | 7 | ||||||||
| Gain from remeasurement of prior interest in equity method investment | (8 | ) | – | – | ||||||||
| Mark-to-market impact on currency derivatives not designated as accounting hedges | 8 | 1 | (16 | ) | ||||||||
| Currency devaluation | – | 10 | – | |||||||||
| Severance, restructuring and other costs | 11 | 18 | 6 | |||||||||
| Total other costs | $ | 73 | $ | 92 | $ | 33 | ||||||
| December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Trade receivables | $ | 1,678 | $ | 2,015 | ||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 621 | 582 | ||||||
| Other receivables | 122 | 143 | ||||||
| Allowance for doubtful accounts | (32 | ) | (21 | ) | ||||
| Total receivables | $ | 2,389 | $ | 2,719 | ||||
| December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Raw materials | $ | 159 | $ | 238 | ||||
| Work-in-process | 827 | 894 | ||||||
| Finished goods, including parts and subassemblies | 2,150 | 2,208 | ||||||
| Other | 24 | 22 | ||||||
| 3,160 | 3,362 | |||||||
| Excess of current costs over LIFO costs | (86 | ) | (120 | ) | ||||
| Allowance for obsolete and excess inventory | (145 | ) | (109 | ) | ||||
| Total inventories | $ | 2,929 | $ | 3,133 | ||||
| December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Land and land improvements | $ | 130 | $ | 132 | ||||
| Buildings | 726 | 744 | ||||||
| Machinery and equipment | 1,682 | 1,662 | ||||||
| Tooling, dies, patterns, etc. | 179 | 208 | ||||||
| Office furniture & equipment | 212 | 210 | ||||||
| Capitalized software | 370 | 348 | ||||||
| Assets under capital leases | 120 | 107 | ||||||
| Construction in progress | 127 | 231 | ||||||
| All other | 34 | 28 | ||||||
| 3,580 | 3,670 | |||||||
| Accumulated depreciation | (1,616 | ) | (1,633 | ) | ||||
| Total plant and equipment, net | $ | 1,964 | $ | 2,037 | ||||
(dollars in millions) | Subsea | Surface | Drilling | Valves & Measurement | Discontinued Operations | Total | ||||||||||||||||||
| Balance at December 31, 2013 | $ | 1,654 | $ | 199 | $ | 505 | $ | 318 | $ | 249 | $ | 2,925 | ||||||||||||
| Discontinued operations | – | – | – | – | (249 | ) | (249 | ) | ||||||||||||||||
| Impairment | – | (40 | ) | – | – | – | (40 | ) | ||||||||||||||||
| Acquisitions | – | 20 | – | – | – | 20 | ||||||||||||||||||
| Adjustments to the purchase price allocation for prior year acquisitions | 19 | – | – | (1 | ) | – | 18 | |||||||||||||||||
| Translation effect of currency changes and other | (197 | ) | (6 | ) | (4 | ) | (6 | ) | – | (213 | ) | |||||||||||||
| Balance at December 31, 2014 | $ | 1,476 | $ | 173 | $ | 501 | $ | 311 | $ | – | $ | 2,461 | ||||||||||||
| December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Customer relationships | $ | 459 | $ | 519 | ||||
| Patents and technology | 382 | 426 | ||||||
| Trademarks | 68 | 69 | ||||||
| Noncompete agreements, engineering drawings and other | 80 | 103 | ||||||
| 989 | 1,117 | |||||||
| Accumulated amortization | (261 | ) | (213 | ) | ||||
| Total intangibles, net | $ | 728 | $ | 904 | ||||
| December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Trade accounts payable and accruals | $ | 1,084 | $ | 1,184 | ||||
| Advances from customers | 1,576 | 1,676 | ||||||
| Other accruals | 1,088 | 1,023 | ||||||
| Total accounts payable and accrued liabilities | $ | 3,748 | $ | 3,883 | ||||
Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||
| Service cost | $ | 18 | $ | 10 | $ | 3 | $ | − | $ | − | $ | − | ||||||||||||
| Interest cost | 20 | 17 | 15 | − | − | − | ||||||||||||||||||
| Expected return on plan assets | (27 | ) | (21 | ) | (18 | ) | − | − | − | |||||||||||||||
| Amortization of prior service credits | (2 | ) | (2 | ) | – | (1 | ) | (1 | ) | (1 | ) | |||||||||||||
| Amortization of losses (gains) | 9 | 8 | 6 | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||
| Curtailment gain | (12 | ) | – | – | – | – | – | |||||||||||||||||
| Settlement loss | 4 | – | 4 | – | – | – | ||||||||||||||||||
| Other | – | – | 2 | − | − | − | ||||||||||||||||||
| Total net benefit plan expense (income) | $ | 10 | $ | 12 | $ | 12 | $ | (2 | ) | $ | (2 | ) | $ | (2 | ) | |||||||||
| December 31, 2014 | December 31, 2013 | Year Ending December 31, 2015 | ||||||||||||||||||
(dollars in millions) | Before Tax | After Tax | Before Tax | After Tax | Expected Amortization | |||||||||||||||
Pension benefits: | ||||||||||||||||||||
| Prior service credits | $ | 18 | $ | 14 | $ | 22 | $ | 17 | $ | (2 | ) | |||||||||
| Actuarial losses, net | (136 | ) | (109 | ) | (119 | ) | (94 | ) | 10 | |||||||||||
Postretirement benefits: | ||||||||||||||||||||
| Prior service credits | 3 | 2 | 3 | 2 | (1 | ) | ||||||||||||||
| Actuarial gains | 8 | 5 | 9 | 6 | (1 | ) | ||||||||||||||
| $ | (107 | ) | $ | (88 | ) | $ | (85 | ) | $ | (69 | ) | $ | 6 | |||||||
| Pension Benefits | Postretirement Benefits | |||||||||||||||
(dollars in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Benefit obligation at beginning of year | $ | 489 | $ | 387 | $ | 11 | $ | 13 | ||||||||
| Service cost | 18 | 10 | − | − | ||||||||||||
| Interest cost | 20 | 17 | − | − | ||||||||||||
| Plan participants’ contributions | 1 | 1 | − | − | ||||||||||||
| Actuarial losses (gains) | 78 | 12 | (1 | ) | (1 | ) | ||||||||||
| Exchange rate changes | (52 | ) | 5 | − | − | |||||||||||
| Benefit payments | (14 | ) | (14 | ) | (1 | ) | (1 | ) | ||||||||
| Plan amendments | − | (21 | ) | − | − | |||||||||||
| Acquisitions | − | 67 | − | – | ||||||||||||
| Curtailments | (23 | ) | – | − | – | |||||||||||
| Settlements | (8 | ) | – | − | − | |||||||||||
| Other | – | 25 | − | − | ||||||||||||
| Benefit obligation at end of year | $ | 509 | $ | 489 | $ | 9 | $ | 11 | ||||||||
| Pension Benefits | Postretirement Benefits | |||||||||||||||
(dollars in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Fair value of plan assets at beginning of year | $ | 432 | $ | 318 | $ | – | $ | − | ||||||||
| Actual return on plan assets | 53 | 41 | − | − | ||||||||||||
| Company contributions | 27 | 13 | 1 | 1 | ||||||||||||
| Plan participants’ contributions | 1 | 1 | − | − | ||||||||||||
| Exchange rate changes | (40 | ) | 6 | − | − | |||||||||||
| Benefit payments | (14 | ) | (14 | ) | (1 | ) | (1 | ) | ||||||||
| Acquisitions | – | 46 | – | – | ||||||||||||
| Settlements | (8 | ) | – | – | – | |||||||||||
| Other | 4 | 21 | − | − | ||||||||||||
| Fair value of plan assets at end of year | $ | 455 | $ | 432 | $ | − | $ | − | ||||||||
| Pension Benefits | Postretirement Benefits | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
(dollars in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Current | $ | (1 | ) | $ | (1 | ) | $ | (1 | ) | $ | (2 | ) | ||||
| Non-current | (53 | ) | (55 | ) | (8 | ) | (9 | ) | ||||||||
| Underfunded status at end of year | $ | (54 | ) | $ | (56 | ) | $ | (9 | ) | $ | (11 | ) | ||||
| 2014 | 2013 | 2012 | ||||||||||
U.K. plan: | ||||||||||||
| Equity securities | 55 | % | 60 | % | 54 | % | ||||||
| Fixed income debt securities, cash and other | 45 | % | 40 | % | 46 | % | ||||||
Fair Value Based on Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value Based on Significant Other Observable Inputs (Level 2) | Fair Value Based on Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||||||||||||
(dollars in millions) | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1 | $ | 1 | $ | – | $ | – | $ | – | $ | – | $ | 1 | $ | 1 | ||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
| U.S. equities | – | – | 83 | 83 | – | – | 83 | 83 | ||||||||||||||||||||||||
| Non-U.S. equities | – | – | 120 | 125 | – | – | 120 | 125 | ||||||||||||||||||||||||
Bonds: | ||||||||||||||||||||||||||||||||
| Non-U.S. government bonds | – | – | 117 | 92 | – | – | 117 | 92 | ||||||||||||||||||||||||
| Non-U.S. corporate bonds | – | – | 30 | 26 | – | – | 30 | 26 | ||||||||||||||||||||||||
Alternative investments: | ||||||||||||||||||||||||||||||||
| Insurance contracts | – | – | – | – | 89 | 91 | 89 | 91 | ||||||||||||||||||||||||
| Real estate and other | – | – | – | – | 15 | 14 | 15 | 14 | ||||||||||||||||||||||||
| Total assets | $ | 1 | $ | 1 | $ | 350 | $ | 326 | $ | 104 | $ | 105 | $ | 455 | $ | 432 | ||||||||||||||||
| Year Ended December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Balance at beginning of the year | $ | 105 | $ | 28 | ||||
| Purchases/sales, net | 10 | 7 | ||||||
| Other plan additions | – | 68 | ||||||
| Actual return on plan assets | 4 | 3 | ||||||
| Currency impact | (15 | ) | (1 | ) | ||||
| Balance at end of the year | $ | 104 | $ | 105 | ||||
Pension Benefits | Postretirement Benefits | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
Assumptions related to net benefit costs: | ||||||||||||||||
| U.S. plans: | ||||||||||||||||
| Discount rate | 3.75 | % | 2.75 | % | 3.75 | % | 2.75 | % | ||||||||
| Measurement date | 1/1/2014 | 1/1/2013 | 1/1/2014 | 1/1/2013 | ||||||||||||
Foreign plans: | ||||||||||||||||
| Discount rate | 3.5-5.25 | % | 2.25-6.75 | % | – | – | ||||||||||
| Expected return on plan assets | 2.25-6.75 | % | 3.50-6.75 | % | – | – | ||||||||||
| Rate of compensation increase | 2.25-4.5 | % | 3.0-4.5 | % | – | – | ||||||||||
| Measurement date | 1/1/2014 | 1/1/2013 | – | – | ||||||||||||
Assumptions related to end-of-period benefit obligations: | ||||||||||||||||
U.S. plans: | ||||||||||||||||
| Discount rate | 3.25 | % | 3.75 | % | 3.25 | % | 3.75 | % | ||||||||
| Health care cost trend rate | – | – | 7.0 | % | 7.5 | % | ||||||||||
| Measurement date | 12/31/2014 | 12/31/2013 | 12/31/2014 | 12/31/2013 | ||||||||||||
Foreign plans: | ||||||||||||||||
| Discount rate | 2.25-4.25 | % | 3.5-5.25 | % | – | – | ||||||||||
| Rate of compensation increase | 2.25-5.0 | % | 2.25-4.5 | % | – | – | ||||||||||
| Measurement date | 12/31/2014 | 12/31/2013 | – | – | ||||||||||||
Projected Benefit Obligation in Excess of Plan Assets | Accumulated Benefit Obligation in Excess of Plan Assets | |||||||||||||||
| at December 31, | at December 31, | |||||||||||||||
(dollars in millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Fair value of applicable plan assets | $ | 455 | $ | 97 | $ | 455 | $ | 42 | ||||||||
| Projected benefit obligation of applicable plans | $ | 509 | $ | 172 | – | – | ||||||||||
| Accumulated benefit obligation of applicable plans | – | – | $ | 469 | $ | 84 | ||||||||||
(dollars in millions) | Pension Benefits | Postretirement Benefits | ||||||
Year ending December 31: | ||||||||
| 2015 | $ | 68 | $ | 1 | ||||
| 2016 | $ | 12 | $ | 1 | ||||
| 2017 | $ | 12 | $ | 1 | ||||
| 2018 | $ | 13 | $ | 1 | ||||
| 2019 | $ | 14 | $ | 1 | ||||
| 2020 - 2024 | $ | 74 | $ | 3 | ||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Outstanding restricted and deferred stock units and awards | $ | 44 | $ | 40 | $ | 32 | ||||||
| Unvested outstanding stock options | 10 | 14 | 12 | |||||||||
| Total stock-based compensation expense | $ | 54 | $ | 54 | $ | 44 | ||||||
| Options | Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (dollars in millions) | ||||||||||||
| Outstanding at January 1, 2014 | 4,197,093 | $ | 47.92 | |||||||||||||
| Granted | 782,779 | 57.71 | ||||||||||||||
| Exercised | (1,064,138 | ) | 40.48 | |||||||||||||
| Forfeited | (3,246 | ) | 64.97 | |||||||||||||
| Outstanding at December 31, 2014 | 3,912,488 | $ | 51.89 | 6.27 | $ | 13 | ||||||||||
| Vested at December 31, 2014 or expected to vest in the future | 3,899,272 | $ | 51.86 | 6.26 | $ | 13 | ||||||||||
| Exercisable at December 31, 2014 | 2,471,452 | $ | 47.32 | 4.63 | $ | 13 | ||||||||||
At December 31, 2014 | ||||
Stock-based compensation cost not yet recognized under the straight-line method (dollars in millions) | $ | 14 | ||
Weighted-average remaining expense recognition period (in years) | 1.95 | |||
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
Expected life (in years) | 3.3 | 3.2 | 3.2 | |||||||||
| Risk-free interest rate | 0.86 | % | 0.67 | % | 0.37 | % | ||||||
| Volatility | 33.8 | % | 34.3 | % | 39.4 | % | ||||||
| Expected dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Grant-date fair value per option | $ | 14.51 | $ | 16.19 | $ | 15.68 | ||||||
Intrinsic value of options exercised (dollars in millions) | $ | 26 | $ | 31 | $ | 34 | ||||||
| Average intrinsic value per share of options exercised | $ | 24.17 | $ | 26.30 | $ | 23.39 | ||||||
Restricted and Deferred Stock Units | Number | Weighted-Average Grant Date Fair Value | ||||||
| Nonvested at January 1, 2014 | 1,658,357 | $ | 28.22 | |||||
| Granted | 826,329 | 59.63 | ||||||
| Vested | (563,179 | ) | 59.82 | |||||
| Forfeited | (72,825 | ) | 57.22 | |||||
| Nonvested at December 31, 2014 | 1,848,682 | $ | 31.89 | |||||
At December 31, 2014 | ||||
Stock-based compensation cost not yet recognized under the straight-line method (dollars in millions) | $ | 46 | ||
Weighted-average remaining expense recognition period (in years) | 1.60 | |||
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Number of units granted with performance conditions | 174,697 | 185,992 | 211,244 | |||||||||
Intrinsic value of units vesting (dollars in millions) | $ | 34 | $ | 46 | $ | 38 | ||||||
| Total number of units granted | 826,329 | 838,207 | 674,578 | |||||||||
| Weighted average grant date fair value per unit | $ | 59.63 | $ | 57.95 | $ | 50.44 | ||||||
| December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
| Commercial paper (0.49% weighted average rate) | $ | 201 | $ | – | ||||
Senior notes: | ||||||||
| Floating rate notes due June 2, 2014 | – | 250 | ||||||
| 1.6% notes due April 30, 2015 | – | 250 | ||||||
| 1.15% notes due December 15, 2016 | 250 | 250 | ||||||
| 1.4% notes due June 15, 2017 | 250 | – | ||||||
| 6.375% notes due July 15, 2018 | 450 | 450 | ||||||
| 4.5% notes due June 1, 2021 | 250 | 250 | ||||||
| 3.6% notes due April 30, 2022 | 250 | 250 | ||||||
| 4.0% notes due December 15, 2023 | 250 | 250 | ||||||
| 3.7% notes due June 15, 2024 | 250 | – | ||||||
| 7.0% notes due July 15, 2038 | 300 | 300 | ||||||
| 5.95% notes due June 1, 2041 | 250 | 250 | ||||||
| 5.125% notes due December 15, 2043 | 250 | 250 | ||||||
| Unamortized original issue discount | (7 | ) | (7 | ) | ||||
| Other debt | 67 | 57 | ||||||
| Obligations under capital leases | 71 | 60 | ||||||
| 3,082 | 2,860 | |||||||
| Current maturities | (263 | ) | (297 | ) | ||||
| Long-term maturities | $ | 2,819 | $ | 2,563 | ||||
| Year Ended December 31 | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Interest expensed | $ | 149 | $ | 115 | $ | 104 | ||||||
| Interest paid | $ | 142 | $ | 105 | $ | 97 | ||||||
| Capital | Operating | |||||||
(dollars in millions) | Lease Payments | Lease Payments | ||||||
| Year ending December 31: | ||||||||
| 2015 | $ | 17 | $ | 103 | ||||
| 2016 | 15 | 90 | ||||||
| 2017 | 12 | 78 | ||||||
| 2018 | 8 | 64 | ||||||
| 2019 | 6 | 57 | ||||||
| Thereafter | 62 | 350 | ||||||
| Future minimum lease payments | 120 | 742 | ||||||
| Less: amount representing interest | (49 | ) | – | |||||
| Lease obligations at December 31, 2014 | $ | 71 | $ | 742 | ||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| U.S. operations | $ | 294 | $ | 219 | $ | 664 | ||||||
| Foreign operations | 786 | 636 | 178 | |||||||||
| Income from continuing operations before income taxes | $ | 1,080 | $ | 855 | $ | 842 | ||||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
Current: | ||||||||||||
| U.S. federal | $ | 70 | $ | – | $ | 97 | ||||||
| U.S. state and local | 4 | 11 | 7 | |||||||||
| Foreign | 231 | 166 | 137 | |||||||||
| 305 | 177 | 241 | ||||||||||
Deferred: | ||||||||||||
| U.S. federal | – | 31 | (37 | ) | ||||||||
| U.S. state and local | (3 | ) | 2 | (2 | ) | |||||||
| Foreign | (44 | ) | (14 | ) | (45 | ) | ||||||
| (47 | ) | 19 | (84 | ) | ||||||||
| Income tax provision | $ | 258 | $ | 196 | $ | 157 | ||||||
| Year Ended December 31, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| U.S. federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
| State and local income taxes | – | 1.0 | 0.4 | |||||||||
| Foreign statutory rate differential | (10.7 | ) | (11.6 | ) | (10.2 | ) | ||||||
| Change in valuation allowance on deferred tax assets | 3.4 | (1.7 | ) | 6.6 | ||||||||
| Nondeductible expenses | (0.1 | ) | 1.1 | 0.9 | ||||||||
| Net U.S. tax on foreign source income | (2.9 | ) | (3.2 | ) | (12.2 | ) | ||||||
| All other | (0.8 | ) | 2.3 | (1.9 | ) | |||||||
| Total | 23.9 | % | 22.9 | % | 18.6 | % | ||||||
Total income taxes paid (dollars in millions) | $ | 353 | $ | 329 | $ | 240 | ||||||
| December 31, | ||||||||
(dollars in millions) | 2014 | 2013 | ||||||
Deferred tax liabilities: | ||||||||
| Plant and equipment | $ | (190 | ) | $ | (171 | ) | ||
| Intangible assets | (221 | ) | (251 | ) | ||||
| Other | (9 | ) | (16 | ) | ||||
| Total deferred tax liabilities | (420 | ) | (438 | ) | ||||
Deferred tax assets: | ||||||||
| Inventory | 48 | 20 | ||||||
| Postretirement benefits other than pensions | 3 | 12 | ||||||
| Reserves and accruals | 160 | 93 | ||||||
| Net operating losses and tax credits | 259 | 246 | ||||||
| Pensions | 38 | 16 | ||||||
| Other | 27 | 17 | ||||||
| Total deferred tax assets | 535 | 404 | ||||||
| Valuation allowance | (79 | ) | (59 | ) | ||||
| Net deferred tax assets (liabilities) | $ | 36 | $ | (93 | ) | |||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Balance at beginning of year | $ | 103 | $ | 121 | $ | 148 | ||||||
| Decreases in estimates for tax positions taken prior to the current year | – | – | (11 | ) | ||||||||
| Increases due to tax positions taken during the current year | 6 | 3 | – | |||||||||
| Decreases relating to settlements with tax authorities | (10 | ) | (19 | ) | (10 | ) | ||||||
| Decreases resulting from the lapse of applicable statutes of limitation | – | – | (7 | ) | ||||||||
| Net increases (decreases) due to translation and interest | (2 | ) | (2 | ) | 1 | |||||||
| Balance at end of year | $ | 97 | $ | 103 | $ | 121 | ||||||
United States | United Kingdom | Canada | France | Germany | Norway | Singapore | Italy | |||||||
| 2011 | 2012 | 2006 | 2012 | 2008 | 2010 | 2010 | 2008 |
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Balance at beginning of year | $ | 59 | $ | 84 | $ | 30 | ||||||
| Valuation allowances for unutilized net operating losses and excess foreign tax credits generated in the current year | 25 | 11 | 36 | |||||||||
| Change in valuation allowances related to prior years | (2 | ) | (16 | ) | 19 | |||||||
| Write-off of valuation allowances and associated deferred tax assets for certain losses that have no possibility of being utilized | – | (19 | ) | – | ||||||||
| Effect of translation | (3 | ) | (1 | ) | (1 | ) | ||||||
| Balance at end of year | $ | 79 | $ | 59 | $ | 84 | ||||||
(dollars in millions) | Domestic | Foreign | Expiration | |||||||||
| Net operating losses - regular income tax | $ | – | $ | 381 | 2018 - Indefinite | |||||||
| Net operating losses – state income tax | $ | 6 | $ | – | 2018 – 2034 | |||||||
| Foreign tax credits | $ | 93 | $ | – | 2016 – 2024 | |||||||
Common Stock | Treasury Stock | Shares Outstanding | ||||||||||
| Balance - December 31, 2011 | 263,111,472 | (17,579,397 | ) | 245,532,075 | ||||||||
| Purchase of treasury stock | – | (412,800 | ) | (412,800 | ) | |||||||
| Stock issued under stock compensation plans | – | 1,576,861 | 1,576,861 | |||||||||
| Balance - December 31, 2012 | 263,111,472 | (16,415,336 | ) | 246,696,136 | ||||||||
| Purchase of treasury stock | – | (26,955,623 | ) | (26,955,623 | ) | |||||||
| Stock issued under stock compensation plans | – | 1,687,795 | 1,687,795 | |||||||||
| Balance - December 31, 2013 | 263,111,472 | (41,683,164 | ) | 221,428,308 | ||||||||
| Purchase of treasury stock | – | (27,970,492 | ) | (27,970,492 | ) | |||||||
| Stock issued under stock compensation plans | – | 1,514,629 | 1,514,629 | |||||||||
| Balance - December 31, 2014 | 263,111,472 | (68,139,027 | ) | (194,972,445 | ) | |||||||
(dollars in millions) | Accumulated Foreign Currency Translation Gain (Loss) | Prior Service Credits and Net Actuarial Losses | Accumulated Gain (Loss) on Cash Flow Hedges | Total | Other Comprehensive Income | |||||||||||||||
| Balance at December 31, 2011 | $ | (29 | ) | $ | (56 | ) | $ | (6 | ) | $ | (91 | ) | ||||||||
| Foreign currency translation gain (loss) | 75 | – | – | 75 | $ | 75 | ||||||||||||||
| Actuarial gains (losses) recognized in other comprehensive income, net of tax | – | (33 | ) | – | (33 | ) | (33 | ) | ||||||||||||
| Amortization of actuarial (gains) losses, net of tax | – | 2 | – | 2 | 2 | |||||||||||||||
| Gain (loss) on derivatives recognized in other comprehensive income, net of tax | – | – | 10 | 10 | 10 | |||||||||||||||
| (Gain) loss on derivatives reclassified from accumulated other comprehensive income, net of tax | 7 | 7 | 7 | |||||||||||||||||
| Balance at December 31, 2012 | 46 | (87 | ) | 11 | (30 | ) | $ | 61 | ||||||||||||
| Foreign currency translation gain (loss) | (95 | ) | – | – | (95 | ) | $ | (95 | ) | |||||||||||
| Actuarial gains (losses) recognized in other comprehensive income, net of tax | – | 40 | – | 40 | 40 | |||||||||||||||
| Amortization of actuarial (gains) losses, net of tax | – | 2 | – | 2 | 2 | |||||||||||||||
| Gain (loss) on derivatives recognized in other comprehensive income, net of tax | – | – | 6 | 6 | 6 | |||||||||||||||
| (Gain) loss on derivatives reclassified from accumulated other comprehensive income, net of tax | – | – | (3 | ) | (3 | ) | (3 | ) | ||||||||||||
| Balance at December 31, 2013 | (49 | ) | (45 | ) | 14 | (80 | ) | $ | (50 | ) | ||||||||||
| Foreign currency translation gain (loss) | (379 | ) | – | – | (379 | ) | $ | (379 | ) | |||||||||||
| Actuarial gains (losses) recognized in other comprehensive income, net of tax | – | (31 | ) | – | (31 | ) | (31 | ) | ||||||||||||
Curtailment and settlement gains (losses) recognized in other comprehensive income, net of tax | – | (3 | ) | – | (3 | ) | (3 | ) | ||||||||||||
| Amortization of actuarial (gains) losses, net of tax | – | 1 | – | 1 | 1 | |||||||||||||||
| Gain (loss) on derivatives recognized in other comprehensive income, net of tax | – | – | (52 | ) | (52 | ) | (52 | ) | ||||||||||||
| (Gain) loss on derivatives reclassified from accumulated other comprehensive income, net of tax | – | – | 4 | 4 | 4 | |||||||||||||||
| Balance of December 31, 2014 | $ | (428 | ) | $ | (78 | ) | $ | (34 | ) | $ | (540 | ) | $ | (460 | ) | |||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Revenues: | ||||||||||||
| Subsea | $ | 3,067 | $ | 2,813 | $ | 2,061 | ||||||
| Surface | 2,411 | 2,077 | 1,859 | |||||||||
| Drilling | 3,049 | 2,327 | 1,807 | |||||||||
| V&M | 2,125 | 2,105 | 2,168 | |||||||||
| Elimination of intersegment revenues | (271 | ) | (184 | ) | (100 | ) | ||||||
| Consolidated revenues | $ | 10,381 | $ | 9,138 | $ | 7,795 | ||||||
| Depreciation and amortization: | ||||||||||||
| Subsea | $ | 113 | $ | 85 | $ | 57 | ||||||
| Surface | 126 | 106 | 85 | |||||||||
| Drilling | 60 | 60 | 46 | |||||||||
| V&M | 49 | 47 | 50 | |||||||||
| Consolidated depreciation and amortization | $ | 348 | $ | 298 | $ | 238 | ||||||
| Segment operating income before interest and income taxes: | ||||||||||||
| Subsea | $ | 207 | $ | 152 | $ | 72 | ||||||
| Surface | 427 | 367 | 315 | |||||||||
| Drilling | 474 | 311 | 329 | |||||||||
| V&M | 393 | 414 | 396 | |||||||||
| Elimination of intersegment earnings | (74 | ) | (35 | ) | (21 | ) | ||||||
| Segment operating income before interest and income taxes | 1,427 | 1,209 | 1,091 | |||||||||
| Corporate items: | ||||||||||||
| Corporate expenses | (145 | ) | (162 | ) | (126 | ) | ||||||
| Interest, net | (129 | ) | (100 | ) | (90 | ) | ||||||
| Other costs | (73 | ) | (92 | ) | (33 | ) | ||||||
| Consolidated income from continuing operations before income taxes | $ | 1,080 | $ | 855 | $ | 842 | ||||||
| Capital expenditures: | ||||||||||||
| Subsea | $ | 70 | $ | 80 | $ | 82 | ||||||
| Surface | 125 | 156 | 132 | |||||||||
| Drilling | 38 | 111 | 97 | |||||||||
| V&M | 49 | 58 | 30 | |||||||||
| Corporate | 96 | 102 | 69 | |||||||||
| Discontinued operations | 7 | 13 | 17 | |||||||||
| Consolidated capital expenditures | $ | 385 | $ | 520 | $ | 427 | ||||||
| Total assets: | ||||||||||||
| Subsea | $ | 5,571 | $ | 5,897 | $ | 3,364 | ||||||
| Surface | 2,756 | 2,705 | 2,307 | |||||||||
| Drilling | 3,011 | 3,076 | 2,413 | |||||||||
| V&M | 1,633 | 1,765 | 1,743 | |||||||||
| Corporate | 581 | 844 | 1,376 | |||||||||
| Discontinued operations | 217 | 616 | 615 | |||||||||
| Elimination of intersegment investments | (877 | ) | (654 | ) | (660 | ) | ||||||
| Consolidated total assets | $ | 12,892 | $ | 14,249 | $ | 11,158 | ||||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
Revenues: | ||||||||||||
| United States | $ | 4,689 | $ | 4,311 | $ | 4,058 | ||||||
| United Kingdom | 964 | 822 | 612 | |||||||||
| Other foreign countries | 4,728 | 4,005 | 3,125 | |||||||||
| Total revenues | $ | 10,381 | $ | 9,138 | $ | 7,795 | ||||||
| December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
Long-lived assets: | ||||||||||||
| United States | $ | 2,367 | $ | 2,670 | $ | 2,532 | ||||||
| United Kingdom | 219 | 197 | 170 | |||||||||
| Other foreign countries | 2,567 | 2,999 | 1,323 | |||||||||
| Total long-lived assets | $ | 5,153 | $ | 5,866 | $ | 4,025 | ||||||
| Year Ended December 31, | ||||||||||||
(amounts in millions, except per share data) | 2014 | 2013 | 2012 | |||||||||
| Net income attributable to Cameron | $ | 811 | $ | 699 | $ | 751 | ||||||
| Average shares outstanding (basic) | 204 | 242 | 246 | |||||||||
| Common stock equivalents | 1 | 2 | 2 | |||||||||
| Shares utilized in diluted earnings per share calculation | 205 | 244 | 248 | |||||||||
Earnings per share attributable to Cameron stockholders: | ||||||||||||
| Basic | $ | 3.98 | $ | 2.89 | $ | 3.05 | ||||||
| Diluted | $ | 3.96 | $ | 2.87 | $ | 3.03 | ||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
| Tax benefit of stock compensation plan transactions | $ | 6 | $ | 10 | $ | 12 | ||||||
| Change in fair value of derivatives accounted for as cash flow hedges, net of tax | $ | (76 | ) | $ | 14 | $ | 10 | |||||
| Actuarial gain (loss), net, related to defined benefit pension and postretirement benefit plans | $ | (35 | ) | $ | 13 | $ | (34 | ) | ||||
Fair Value Based on Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value Based on Significant Other Observable Inputs (Level 2) | Total | ||||||||||||||||||||||
(dollars in millions) | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||||||
| Cash | $ | 616 | $ | 618 | $ | – | $ | – | $ | 616 | $ | 618 | ||||||||||||
| Money market funds | 842 | 1,172 | – | – | 842 | 1,172 | ||||||||||||||||||
| Commercial paper | – | – | 13 | 4 | 13 | 4 | ||||||||||||||||||
| U.S. treasury securities | 5 | – | – | – | 5 | – | ||||||||||||||||||
| U.S. corporate obligations | 4 | – | – | – | 4 | – | ||||||||||||||||||
| Non-U.S. bank and other obligations | 33 | 19 | – | – | 33 | 19 | ||||||||||||||||||
Short-term investments: | ||||||||||||||||||||||||
| Commercial paper | – | – | 11 | – | 11 | – | ||||||||||||||||||
| U.S. Treasury securities | 51 | 41 | – | – | 51 | 41 | ||||||||||||||||||
| U.S. corporate obligations | 51 | – | – | – | 51 | – | ||||||||||||||||||
Non-qualified plan assets: | ||||||||||||||||||||||||
| Money market funds | 1 | 1 | – | – | 1 | 1 | ||||||||||||||||||
| Domestic bond funds | 3 | 3 | – | – | 3 | 3 | ||||||||||||||||||
| Domestic equity funds | 5 | 5 | – | – | 5 | 5 | ||||||||||||||||||
| International equity funds | 3 | 3 | – | – | 3 | 3 | ||||||||||||||||||
| Blended equity funds | 5 | 4 | – | – | 5 | 4 | ||||||||||||||||||
| Common stock | 2 | 2 | – | – | 2 | 2 | ||||||||||||||||||
Derivatives, net asset (liability): | ||||||||||||||||||||||||
| Foreign currency contracts | – | – | (99 | ) | 19 | (99 | ) | 19 | ||||||||||||||||
| Total financial instruments | $ | 1,621 | $ | 1,868 | $ | (75 | ) | $ | 23 | $ | 1,546 | $ | 1,891 | |||||||||||
| Notional Amount - Buy | Notional Amount - Sell | |||||||||||||||||||||||||||
(in millions) | 2015 | 2016 | 2017 | Total | 2015 | 2016 | Total | |||||||||||||||||||||
| Foreign exchange forward contracts - | ||||||||||||||||||||||||||||
Notional currency in: | ||||||||||||||||||||||||||||
| Euro | 200 | 14 | – | 214 | (10 | ) | (1 | ) | (11 | ) | ||||||||||||||||||
| Malaysian ringgit | 377 | 51 | – | 428 | (29 | ) | – | (29 | ) | |||||||||||||||||||
| Norwegian krone | 895 | 117 | 4 | 1,016 | (96 | ) | (44 | ) | (140 | ) | ||||||||||||||||||
| Pound Sterling | 110 | 5 | – | 115 | (22 | ) | (1 | ) | (23 | ) | ||||||||||||||||||
| U.S. dollar | 60 | – | – | 60 | (635 | ) | (47 | ) | (682 | ) | ||||||||||||||||||
| Foreign exchange option contracts - | ||||||||||||||||||||||||||||
Notional currency in: | ||||||||||||||||||||||||||||
| U.S. dollar | 87 | – | – | 87 | – | – | – | |||||||||||||||||||||
| December 31, | ||||||||||||||||
| 2014 | 2013 | |||||||||||||||
(dollars in millions) | Assets | Liabilities | Assets | Liabilities | ||||||||||||
Derivatives designated as hedges: | ||||||||||||||||
Foreign exchange contracts – | ||||||||||||||||
| Current | $ | 8 | $ | 83 | $ | 28 | $ | 10 | ||||||||
| Non-current | 1 | 12 | 3 | 2 | ||||||||||||
| Total derivatives designated as hedges | 9 | 95 | 31 | 12 | ||||||||||||
Derivatives not designated as hedges: | ||||||||||||||||
Foreign exchange contracts – | ||||||||||||||||
| Current | 1 | 14 | 6 | 6 | ||||||||||||
| Non-current | – | – | – | – | ||||||||||||
| Total derivatives not designated as hedges | 1 | 14 | 6 | 6 | ||||||||||||
| Total derivatives | $ | 10 | $ | 109 | $ | 37 | $ | 18 | ||||||||
| Year Ended December 31, | ||||||||||||
(dollars in millions) | 2014 | 2013 | 2012 | |||||||||
Derivatives designated as hedging instruments: | ||||||||||||
Foreign currency contracts – | ||||||||||||
| Cost of sales | $ | (7 | ) | $ | 1 | $ | – | |||||
Derivatives not designated as hedging instruments: | ||||||||||||
Foreign currency contracts – | ||||||||||||
| Cost of sales | (11 | ) | 7 | 2 | ||||||||
| Other costs | (8 | ) | (1 | ) | 16 | |||||||
| Total pre-tax gain (loss) | $ | (26 | ) | $ | 7 | $ | 18 | |||||
| 2014 (quarter ended) | ||||||||||||||||
(dollars in millions, except per share data) | March 31, | June 30, | September 30, | December 31, | ||||||||||||
| Revenues | $ | 2,329 | $ | 2,570 | $ | 2,678 | $ | 2,804 | ||||||||
Revenues less cost of sales (exclusive of depreciation and amortization) | $ | 639 | $ | 720 | $ | 763 | $ | 795 | ||||||||
| Other costs (credits) | $ | 49 | $ | (6 | ) | $ | 19 | $ | 11 | |||||||
| Net income | $ | 115 | $ | 233 | $ | 238 | $ | 262 | ||||||||
| Net income attributable to noncontrolling interests | $ | 4 | $ | 12 | $ | 13 | $ | 8 | ||||||||
| Net income attributable to Cameron stockholders | $ | 111 | $ | 221 | $ | 225 | $ | 254 | ||||||||
Earnings per share attributable to Cameron stockholders: | ||||||||||||||||
| Basic | $ | 0.51 | $ | 1.08 | $ | 1.12 | $ | 1.30 | ||||||||
| Diluted | $ | 0.51 | $ | 1.08 | $ | 1.11 | $ | 1.28 | ||||||||
| 2013 (quarter ended) | ||||||||||||||||
(dollars in millions, except per share data) | March 31, | June 30, | September 30, | December 31, | ||||||||||||
| Revenues | $ | 1,956 | $ | 2,134 | $ | 2,317 | $ | 2,731 | ||||||||
Revenues less cost of sales (exclusive of depreciation and amortization) | $ | 574 | $ | 620 | $ | 668 | $ | 758 | ||||||||
| Other costs (credits) | $ | 31 | $ | 36 | $ | 14 | $ | 11 | ||||||||
| Net income | $ | 149 | $ | 140 | $ | 192 | $ | 243 | ||||||||
| Net income attributable to noncontrolling interests | $ | – | $ | – | $ | 3 | $ | 22 | ||||||||
| Net income attributable to Cameron stockholders | $ | 149 | $ | 140 | $ | 189 | $ | 221 | ||||||||
Earnings per share attributable to Cameron stockholders: | ||||||||||||||||
| Basic | $ | 0.60 | $ | 0.57 | $ | 0.78 | $ | 0.96 | ||||||||
| Diluted | $ | 0.60 | $ | 0.57 | $ | 0.78 | $ | 0.94 | ||||||||
Our Code of Ethics for Management Personnel, including Senior Financial Officers, is designed to promote honest and aethical conduct, proper disclosure of financial information, and compliance with applicable laws, rules and regulations by our officers and financial management. Our senior financial officers verify their commitment to and compliance with the Code on an annual basis.
Our Code of Ethics for Directors. A copyConduct applies to all of each of these policies is available on the Registrant’s Internet website at www.c-a-m.comour employees and contractors and is availabledesigned to promote honest and ethical conduct and to articulate and provide guidance on our commitment to several key matters such as safety and health, protecting the environment, fair dealing, proper stewardship of our products, use of company resources, and accurate communication about our finances and products. It also addresses the many legal and ethical facets of integrity in printbusiness dealings with customers, suppliers, investors, the public, governments and the communities in which we live and where we do business. Our Code of Conduct has been translated into more than ten languages and is distributed to any shareholder freeour employees world-wide, who certify their commitment to and compliance with the Code on an annual basis.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Committee Report
We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, we recommended to the Board of charge upon request. The Registrant intends to satisfyDirectors that the disclosure requirements under Item 10 of Form 8-K regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, by posting such information on its website at the address set forth above.
Respectfully submitted,
Peter J. Fluor, Chairman
H. Paulett Eberhart
Rodolfo Landim
Michael E. Patrick
Bruce W. Wilkinson
Compensation Discussion and Analysis
This CD&A explains the Company’s executive compensation philosophy and practices and, in particular, those for our named executive officers or “NEOs.” Our NEOs are our former Chief Executive Officer, our current President and Chief Executive Officer, our Chief Financial Officer, and our three other most highly compensated executive officers in 2015. As used in this CD&A, the “Committee” refers to the Compensation Committee of the Board.
The following is a list of our NEOs by name and position for 2015:
Name | Position |
R. Scott Rowe | President and Chief Executive Officer* |
Jack B. Moore | Chairman of the Board** |
Charles M. Sledge | Senior Vice President and Chief Financial Officer |
William C. Lemmer | Senior Vice President and General Counsel |
Steven P. Geiger | Vice President, Chief Administrative Officer |
Hunter W. Jones | Vice President & President, Drilling Systems |
* | Mr. Rowe was President and Chief Operating Officer until October 5, 2015 when he became President and Chief Executive Officer. |
** | Mr. Moore retired from the Company and became non-executive Chairman on October 5, 2015. Prior to his retirement he was Chief Executive Officer as well as Chairman. |
The CD&A is organized into five parts, as follows:
Part I | — | Executive Compensation Objectives and Design | ||
Part II | — | Roles and Responsibilities | ||
Part III | — | Executive Compensation Decision-Making Process | ||
Part IV | — | Executive Compensation Elements and Mix | ||
Part V | — | Other Matters Affecting Our Executive Compensation |
Part I — Executive Compensation Objectives and Design
Purpose. The purpose of our executive compensation program is to provide us with a means to:
· Attract, retain and motivate qualified executives to manage our business and affairs and lead us to our business goals and objectives;
· Provide performance-based incentives to encourage and reward achievement of our annual goals and long-term and strategic objectives; and
·Provide a competitive total compensation package that reflects our performance against goals and objectives, as well as the individual’s performance and contributions to our success.
Pay-for-Performance. Our executive compensation program is designed to align our compensation incentives with the operating and performance goals and metrics chosen by our Board to drive long-term stockholder value creation. The design makes a significant portion of total direct compensation contingent upon performance against goals. Our NEOs’ targeted total direct compensation can be earned only if performance targets established by the Committee are met. The elements of our executive compensation that pay only against performance are the:
·Annual Incentives
·Performance Restricted Stock Unit Awards (“PRSUs”)
·Stock Options
We consider these elements of executive compensation to be filed relatingperformance-based compensation which is “at risk” because our annual incentives and performance-based equity awards can be earned only if pre-determined levels of performance are achieved against approved goals, and our stock options provide value only if and to the extent there is an increase in the value of our Common Stock during the option term. Although our RSUs have a performance hurdle, we do not classify them as performance compensation for the purpose of a pay-for-performance discussion.
Targeted to Median. Our program targets the level of cash compensation (made up of base salaries and annual incentives) and long-term equity incentive grant value at the median of what the Committee and its independent compensation consultant consider to be “competitive market levels.” The Committee considers the median of these “competitive market levels” to be the appropriate guidepost for achieving our compensation objectives.
A median “competitive market level” is developed annually for each executive officer by the Committee’s independent compensation consultant. It is developed by comparing each executive officer’s compensation to that of officers in similar positions with (1) our peer companies and (2) companies in the manufacturing industry in general. Peer group data is taken from SEC filings and industry data is taken from Mercer and Aon Hewitt Associates. When reviewing compensation levels against the survey data, the Committee considers only the aggregated survey data provided by the surveys. The identity of the individual companies comprising the survey data is not disclosed to, or
considered by, the Committee in its evaluation process and, the Committee does not consider the identity of the companies comprising the survey data to be material for this purpose.
For the CEO and Chief Financial Officer positions peer company data is given a 75% weighting and industry data a 25% weighting; for the General Counsel position, peer company data is given a 25% weighting and industry data 75%; and, for the other NEO positions, industry data is given a 100% weighting. The weightings are employed to reflect the comparability of the position matches at each level, as the more a comparable position appears in peer SEC filings, the greater the weight given peer data.
The industry data is typically lower than peer group data, resulting in our “median competitive market levels” being lower than if derived solely from peer data alone.
Peer Groups. The Committee selected two different peer groups for two different purposes, a compensation peer group for the purpose of benchmarking and making executive compensation comparisons and a performance peer group used for measuring our relative TSR performance for PRSU award purposes.
Our compensation peer group is composed of publicly traded oilfield services and equipment manufacturing companies selected by the Committee because they are generally of similar size and complexity, and are those companies with whom we compete in the labor market to attract and retain qualified executives. They include, but are not limited to, the same companies which we use for performance comparisons in our Annual Report on Form 10-K.
The compensation peer group used for decisions affecting 2015 compensation is composed of the following 15 companies, as selected and approved by the Committee taking into account the recommendations made by the Committee’s independent compensation consultant, an annual peer-of-peers review, and the peer groups used by certain proxy advisors:
Compensation Peer Group | ||
Baker Hughes Incorporated | National Oilwell Varco, Inc. | |
Eight of the 15 companies in our compensation peer group are included, along with us, in the PHLX Oil Service Sector (Ticker Symbol: OSX). The companies in our compensation peer group not included in the OSX are Dover Corporation, Ensco plc, Flowserve Corporation, FMC Technologies Inc., McDermott International, Inc., Noble Corporation and Parker-Hannifin Corporation. These companies were included because they are manufacturing companies serving the same or similar markets as Cameron. Of the six OSX companies not included in our compensation peer groups, two, Core Laboratories NV and Oceaneering International, Inc., were not included because they are in such sufficiently different businesses from us that the Committee does not consider them peers, and the other four, Diamond Offshore Drilling, Inc., Helmerick & Payne, Inc., Rowan Companies plc and Tidewater, Inc., were not included even though they share some business characteristics with Cameron, because they are drilling companies. The Committee concluded that including them would cause drilling companies to be over weighted in the overall group at the expense of manufacturing companies.
Our performance peer group is the OSX. This index was selected by the Committee because it is a published industry index composed of companies with whom we compete in the capital market. It is also the peer group used for our stock performance graph in our Annual Report on Form 10-K. The TSR goal and the selection of the OSX companies to serve as the bench-mark group for relative TSR
performance of our Company is discussed in Part IV of this CD&A under the caption “Long-Term Incentives — Performance Awards”.
Part II — Roles and Responsibilities
Role of the Compensation Committee. The Committee makes all compensation decisions regarding our executive officers, including our NEOs. The Committee confers with the other independent directors in Executive Session of the Board before making its decisions regarding the compensation of our CEO.
The following are the principal functions of the Committee with respect to executive compensation:
·Establishes compensation policies and reviews them to determine whether they (1) adequately support business goals and objectives or (2) encourage inappropriate behavior from a risk perspective that could have a material adverse effect on us;
·Approves peer group selection criteria and selects the companies included in our peer groups;
·Sets the CEO’s compensation, giving consideration to the performance evaluation of the CEO conducted by the Nominating and Governance Committee, competitive data and the recommendation of the Committee’s independent compensation consultant;
·Sets the other executive officers’ compensation, after giving consideration to performance evaluations provided by the CEO, competitive data and the recommendation of the Committee’s independent compensation consultant;
·Oversees administration of our annual incentive program and (1) establishes eligible classes of participants, (2) sets performance goals, (3) approves minimum, target and maximum awards and (4) certifies attainment of goals and approves any payouts;
·Oversees administration of our long-term incentive plan, including (1) determining the total number of shares available for grant, (2) establishing the award guidelines to be used when determining the amount and mix of individual awards, (3) making grants to executive officers and key employees and (4) authorizing the number of shares available for grant to other employees;
·Exercises oversight responsibility for our severance policies and any individual employment and severance arrangements;
·Reviews compliance with our stock ownership guidelines; and
·Reviews and approves our executive benefits and perquisites.
Role of Independent Compensation Consultant. The Committee is assisted by an independent compensation consultant retained by the Committee on an annual basis. Frederick W. Cook & Co. Inc. (“FWC”) is currently serving in that role. The independent compensation consultant reports to and acts at the direction of the Committee. FWC provides no services for management or the Committee that are unrelated to the duties and responsibilities of the Committee.
At the Committee’s request, FWC annually prepares a Report on Executive Compensation for the Committee. The Report focuses on our executive compensation program’s effectiveness in supporting our business strategy, its reasonableness and competitiveness as compared to the compensation practices of our peer group and other manufacturing companies, and our relative performance versus our peers. It covers each element of total compensation of executive officers, and compares them to data gathered from proxy statements and SEC filings of our peer group companies and from publicly available compensation surveys of the manufacturing industry conducted by Mercer and Aon Hewitt Associates. It calculates competitive market levels of compensation for each executive officer. It analyzes the cost and potential dilution to our stockholders of equity incentives and compares them to
those of our peer group, and reports on the equity ownership of each of our executive officers, including both shares owned directly and owned indirectly through outstanding equity grants.
Independence of Compensation Consultant. The Committee has the sole authority to retain or terminate its compensation consultant and other advisors. The compensation consultant’s role with us is limited to executive compensation matters and no such services are performed unless at the direction of and/or with the approval of the Committee. In connection with its engagement of FWC, the Committee considered various factors bearing on FWC’s independence, including the amount of fees paid by us to FWC and the percentage of FWC’s total revenues they represented; FWC’s policies and procedures for preventing conflicts of interest and compliance with those procedures; any personal and business relationship of any FWC personnel with any of the Committee members or our executive officers; and FWC’s policies prohibiting stock ownership by FWC personnel engaged in any Cameron matter and compliance with those policies. After reviewing these factors, the Committee determined that FWC is independent and that its engagement did not present any conflict of interest.
Role of CEO. Our CEO periodically reviews the performance of other executive officers, including the other NEOs, with the Committee for the Committee’s use when making decisions regarding compensation and other matters, including succession planning. He submits proposals on performance objectives for annual incentive compensation and for long-term incentive grant values. He offers recommendations to the Committee on executive compensation program design and on compensation components for individual executive officers. Our CEO also regularly attends Committee meetings and provides his perspectives, judgment and recommendations on matters being considered by the Committee. He does not offer recommendation on his own compensation, nor does he attend meetings where his compensation is being discussed.
Part III — Executive Compensation Decision-Making Process
Advisory Votes on Executive Compensation. Say-on-Pay Vote. Our stockholders expressed a preference for a yearly advisory Say-on-Pay vote on executive compensation. Accordingly a Say-on-Pay vote has been offered to our stockholders each year since. When considering the executive compensation program and executive compensation decisions, the Committee takes into account the most recent stockholder Say-on-Pay vote and the comments and policies of stockholders and proxy advisory firms expressed in conjunction with that vote or otherwise. The 2015 Say-on-Pay vote conducted in conjunction with our 2015 Annual Meeting of Stockholders passed with 96.46% of the votes cast in favor.
Golden Parachute Vote. In addition, an advisory Golden Parachute vote on executive compensation was conducted on December 17, 2015, in conjunction with the stockholder vote approving the Agreement and Plan of Merger between Cameron and Schlumberger Holdings Corporation, et al., dated August 25, 2015 (the “Agreement and Plan of Merger”). This vote passed with 53% of the votes cast in favor.
Tally Sheets. In addition to a review of the Report on Executive Compensation prepared by the Committee’s independent compensation consultant, each year the Committee reviews a “tally sheet”, which itemizes the total compensation of each of our executive officers, including the NEOs, for the prior two years and the estimated minimum, target and maximum total compensation that could be earned by each during the year the tally sheet is incorporated hereinprepared depending on whether, and to what extent, performance-based compensation is earned. The Committee considers the appropriateness and the amounts of each element, the mix of the elements and the overall amount of total compensation when making its decisions on both the compensation program as a whole and the compensation to be paid each executive for the coming year.
Risk Mitigation. Our compensation philosophy is to emphasize pay-for-performance and to place a significant amount of total compensation at risk for the reasons discussed above. To mitigate against any risk that performance pay might cause, the Committee and the Board have adopted stock ownership requirements and a clawback policy, and the Committee has placed time-vesting requirements on earned PRSUs in order to drive a balanced focus between short-term and long-term focus. The independent compensation consultant and the Committee perform an annual assessment of
our compensation policies and practices, including all incentive programs, to determine whether the risks arising from those policies and practices could be considered reasonably likely to have a material adverse effect on our company. Based on their review, the independent compensation consultant and the Committee again concluded at the Committee’s February, 2016 meeting that our compensation policies and practices do not create risks that are reasonably likely to have such an effect.
Other Considerations. When making compensation decisions with respect to each of our executive officers, including our NEOs, in addition to the items discussed above, the Committee also considers:
·Level of responsibilities and impact of the executive on our results;
·Skill and experience needed to fulfill his or her responsibilities;
·Effectiveness in discharging his or her responsibilities;
·Level of his or her achievement of goals and objectives;
·Performance of Cameron in relation to its peer group;
·Compensation levels and practices of companies with whom we compete for talent;
·Total compensation of each executive position as compared with the compensation for like positions within our peer group and, in order to gain a broader perspective of the range of competitive reasonableness, within the larger category of the manufacturing industry in general;
·Analyses prepared by reference.
·Recommendations of our CEO (except for his own position); and
·Internal equity based on the impact of relative duties, responsibilities, position and performance within our company.
Part IV — Executive Compensation Elements and Mix
Base Salary. Each of our executives earns a base salary for services rendered during the year. Base salaries are paid to provide executive officers with a market-competitive minimum level of annual earnings. Base salary ranges are determined for each executive position based on job responsibilities, required experience, general market competitiveness and internal comparisons. Base salaries, along with all other elements of compensation, are reviewed annually by the Committee at its fall meeting, giving consideration to:
·total compensation as itemized in the tally sheets;
·changes in levels of responsibility;
·performance of the executive and his or her contributions to our overall performance;
·annual competitive review of executive compensation prepared by the Committee’s independent compensation consultant; and
·internal review of the executive’s compensation relative to base salaries of other executive officers.
Based on its evaluation of these factors, during its annual review of executive salaries at its October 2014 meeting, the Committee made no adjustments to 2015 base salaries. The information concerning "Security OwnershipCommittee did make
an in-year adjustment, which is shown in the table below, to Mr. Rowe’s Base Salary to reflect the fact he was selected to become the Company’s CEO, effective October 5, 2015.
|
|
| 2015 Base Salaries | ||||
Name |
| 2014 ($) |
| 2015 ($) |
| % Change |
|
R. Scott Rowe |
| 606,900 |
| 606,900 |
| 0.0 |
|
|
|
|
| 1,000,000 | * | 64.8 |
|
Jack B. Moore |
| 1,125,000 |
| 1,125,000 |
| 0.0 |
|
Charles M. Sledge |
| 652,100 |
| 652,100 |
| 0.0 |
|
William C. Lemmer |
| 556,200 |
| 556,200 |
| 0.0 |
|
Steven P. Geiger |
| 450,000 |
| 450,000 |
| 0.0 |
|
Hunter W. Jones |
| 380,000 |
| 410,000 |
| 7.9 |
|
* Effective as of Certain Beneficial Owners"October 5, 2015, when Mr. Rowe became the Company’s CEO.
As a result of the Committee’s evaluation of the factors discussed above at its October 2015 meeting, and "Security Ownershipthe uncertainties in the macro-environment affecting us and our peers, competitors and customers, the Committee made no adjustments to base salaries for 2016.
|
|
| 2016 Base Salaries | ||||
Name |
| 2015 ($) |
| 2016 ($) |
| % Change |
|
R. Scott Rowe |
| 1,000,000 | * | 1,000,000 |
| 0.0 |
|
Jack B. Moore | �� | 1,125,000 |
| 0 |
| N/A |
|
Charles M. Sledge |
| 652,100 |
| 652,100 |
| 0.0 |
|
William C. Lemmer |
| 556,200 |
| 556,200 |
| 0.0 |
|
Steven P. Geiger |
| 450,000 |
| 450,000 |
| 0.0 |
|
Hunter W. Jones |
| 410,000 |
| 410,000 |
| 0.0 |
|
* Effective as of Management" requiredOctober 5, 2015, when Mr. Rowe became the Company’s CEO.
Annual Incentive Compensation. Our Management Incentive Compensation Plan (“MICP”) provides each of our executive officers and other key management employees an annual opportunity to earn incentive compensation based on performance against pre-established objectives. These objectives are set by Item 12 shall be includedthe Committee and are based on our Board-approved operating plan and budget. Annual incentive compensation is offered to incentivize performance supporting our company-wide objectives, business unit objectives, and individual objectives as well as to reflect competitive practice.
Target Award Opportunities. The Committee, taking into consideration peer group and industry competitive practices, the advice and recommendations of the Committee’s independent compensation consultant, and the recommendations of the CEO for positions other than his own, establishes a target-award opportunity for each executive expressed as a percentage of base salary. Our target values are set at or near the market-median target percentages.
Target awards for our NEOs for 2015 and 2016 are set out below.
MICP Target-Award Opportunities | ||||
(% of base salary) | ||||
Name |
| 2015 |
| 2016 |
R. Scott Rowe |
| 90% |
|
|
|
| 120% | * | 120% |
Jack B. Moore |
| 125% |
| N/A |
Charles M. Sledge |
| 80% |
| 80% |
William C. Lemmer |
| 70% |
| 70% |
Steven P. Geiger |
| 65% |
| 65% |
Hunter W. Jones |
| 65% |
| 65% |
* Effective as of October 5, 2015, when Mr. Rowe became the Company’s CEO.
Performance Objectives. Performance objectives are set by the Committee for each year based on proposals submitted to the Committee by the CEO. The CEO’s proposals, and ultimately the performance objectives selected, are based on and designed to encourage achievement of our annual performance goals set out in our Proxy StatementBoard-approved annual operating plan and budget, as well as business strategies for that year. The Committee also considers overall market conditions, the industry environment and our position in each of our business lines when setting performance objectives.
For 2015, the Committee selected earnings per share (“EPS”) and cash flow from operations as the financial performance objectives for all corporate executives, including the CEO as the Committee considered these objectives to be filed relatingthe principal indicators of financial performance and drivers of stockholder value. For executives with operating unit responsibilities the Committee chose EPS, operating unit consolidated earnings before income taxes (“EBIT”) and unit cash flow.
The Committee also maintained a total TRIR goal for 2015 as the Committee is of the view that our employees are critical to our success and their health and safety need to be a foremost focus of management. For executives with corporate responsibilities, the target objective is a company-wide TRIR goal. For executives with operating unit responsibilities, the TRIR objective is operating unit specific and an improvement over that unit’s individual history. The Committee also maintained an on-time-delivery measure as a performance goal for executives with operating unit responsibilities as this objective is considered to be a key component of customer satisfaction and engagement. The Committee also added a selling, general and administrative (“SG&A”) cost reduction goal for corporate executives in order to lower the Company’s cost structure and enhance profitability.
As in prior years, the Committee set a return on equity (“ROE”) hurdle of 7%. If the hurdle had not been met or exceeded, any bonus payment otherwise earned would have been reduced by 50% for all participants.
In order to allow the Committee the opportunity to exercise the maximum possible discretion when determining award payouts to NEOs while maintaining deductibility under Section 162(m) of the Internal Revenue Code, the Committee establishes an annual baseline performance hurdle for the full funding of the annual incentive compensation for NEOs. For 2015 the baseline performance hurdle was the achievement of positive earnings. If the performance hurdle was met, the incentive compensation pool is funded at the maximum opportunity for each NEO. If the hurdle is not met, the NEOs would not earn any annual incentive compensation. Should the performance hurdle be met and the compensation pool fully funded, the Committee applies negative discretion to determine the actual awards to be made to each NEO, taking into consideration such matters as our actual performance against the MICP performance objectives for 2015, the individual NEO’s performance and contributions, and other factors in the Committee’s discretion.
Weighting of Performance Objectives. The Committee decides what the percent of the target award or weighting will be for each of the Performance Objectives and selected the following for 2015.
2015 Weighting of Performance Objectives Corporate Executives | ||||||||
CAMERON | ||||||||
EPS |
| Cash Flow |
| On-Time Delivery |
| TRIR |
| SG&A Cost Reduction |
50% |
| 20% |
| 10% |
| 10% |
| 10% |
Weighting of Performance Objectives Business Unit Executives | ||||||||
CAMERON |
| BUSINESS UNIT |
|
| ||||
EPS |
| EBIT |
| Cash |
| On-Time |
| TRIR |
25% |
| 25% |
| 20% |
| 20% |
| 10% |
Performance and Payout. The Committee establishes the percent of a target award that can be earned at different performance levels. Minimum, target and maximum payout levels are set out below.
For 2015, because of the challenges posed by the uncertain macro-environment at the time during which goals for the year must be set, the Committee took the following actions:
·Changed the performance curves by widening the performance range and lowering the threshold payments.
·Created a range of +/-2.5% around the goal target for which performance within this range resulted in a target payout for those financial objectives.
In addition, in order to prevent the potential for a windfall payout in the event of an unexpected turnaround in the oil and gas business in 2015, the Committee added a provision that would require Cameron to perform in the top quartile of our performance peer group in order to receive a payout in excess of 150% of target EPS performance. In 2015, Cameron’s TSR was the top performer.
| Performance & Payout | |
| 2015 |
|
Objectives | Performance | Percentage of |
Financial | Less than 75% | 0% |
(EPS*/EBIT/Cash Flow) | 75% | 37.5% |
| 97.5-102.5% | 100% |
| 125% | 200%* |
On-Time Delivery | Less than 75% OTD | 0% |
| 75% | 50% |
| 85% | 100% |
| 95% | 200% |
Safety | More than 0.68 TRIR | 0% |
| 0.68 | 50% |
| 0.57 | 100% |
| 0.46 | 200% |
*To achieve a greater than a 150% payout for EPS, our TSR performance for 2015 had to have been in the top quantile of our performance peer group.
The maximum amount that can be earned under the MICP for any year is capped at 200% of target bonus even when performance exceeds the maximum. Under the MICP, no additional sum can be earned or “banked” for subsequent years.
Certifying Performance. During the first quarter, following year-end and the completion of our financial statement audit, our Company’s and each unit’s actual performance against the established goals is computed. The 2015 results for EPS, adjusted for non-operational items, cash flow from operations, safety and on-time delivery are set out in the table below.
| 2015 Performance Attained | |||||
| Target | Actual | Performance | Payout | Weight | Payout |
CAM EPS ($/sh) | $3.17-$3.33 | $3.90 | 120.00% | 177.82% | 50% | 88.91% |
CAM CASH FLOW ($M) | $614.3-$645.8 | $780.4 | 123.90% | 194.98% | 20% | 39.00% |
CAM OTD (%) | 85.00% | 82.80% | N/A | 89.00% | 10% | 8.90% |
CAM TRIR | 0.57 | 0.46 | N/A | 200.00% | 10% | 20.00% |
ENTERPRISE WIDE COST REDUCTION ($M) | $112.8 | $184.1 | 163.21% | 200.00% | 10.0 | 20.00% |
|
|
|
|
|
|
|
Total Performance |
|
|
|
|
| 176.81% |
Approving Payouts. When determining and approving payouts for 2015 MICP performance, the Committee approved payouts derived from the performance against goals. The Committee did, however, exercise negative discretion of 15% to the 2015 Annual Meetingamount earned for TRIR performance by Corporate NEOs and the executive team of Stockholders and is incorporated herein by reference.
2015 MICP Payouts | ||
| Earned $ | Payout $ |
R. Scott Rowe | 1,283,798 | 1,262,015 |
Jack B. Moore | 1,912,608 | 1,880,156 |
Charles M. Sledge | 922,382 | 906,732 |
William C. Lemmer | 688,392 | 676,712 |
Steven P. Geiger | 517,169 | 508,394 |
Hunter W. Jones | 409,144 | 409,144 |
Long-Term Incentives. The purpose of our long-term equity awards is to support the achievement of our long-term goals. They are also intended to align compensation of executives and other key
management employees with the interests of our long-term stockholders by providing incentives tied to our long-term success and increases in share price and stockholder value.
Our long-term incentive program is administered under our Equity Incentive Plan, which was approved by our stockholders in 2013. The Committee, after discussions with our independent compensation consultant, determines the aggregate target value for the long-term incentives to be granted to the executive officers as a group and individually. The Committee makes its determinations giving consideration to:
·the grant practices of our compensation peer group companies, which are reflected in the independent compensation consultant’s annual Report on Executive Compensation;
·industry grant practices in general;
·the share value to be transferred in comparison to amounts granted by compensation peer group companies and amounts reported in industry surveys; and
·the “burn rate” or percentage of outstanding shares that would be used.
The tables below sets out target long-term incentive grant value established for each of our NEOs for 2015 and 2016.
Target Long-Term Incentive Grant Value | ||
Name | 2015 Value($) | 2016 Value($) |
R. Scott Rowe | 3,536,717 | 6,800,000 |
Jack B. Moore | 7,100,000 | 0 |
Charles M. Sledge | 2,250,000 | 2,250,000 |
William C. Lemmer | 1,765,000 | 1,765,000 |
Steven P. Geiger | 1,200,000 | 1,200,000 |
Hunter W. Jones | 900,000 | 900,000 |
Mr. Rowe’s initial 2015 long-term incentive grant value was $2,500,000. On October 5, 2015, the increased in this value by $1,036,717 in recognition of his appointment as CEO. These additional grants raised Mr. Rowe’s 2015 long-term incentive grant value to 3,536,717.
Long-Term Incentive Vehicle Mix. For 2015, the Committee chose the following long-term incentive grant mix:
Stock Options – 40%
Performance Restricted Stock – 40%
Restricted Stock – 20%
The Committee determined this to be the appropriate mix as it focused equally on three-year objectives and on long-term growth in share value, while placing a lesser, though still significant, emphasis on retention and continuity. Individuals may be granted more or less than the target amounts for their positions, based on individual performance, past grant history, employment retention considerations, internal equity, and the Committee’s evaluation of future chances for promotion.
PRSUs have a three-year vesting period and stock options and RSUs vest over a three-year period with one-third of the award vesting per year beginning on the first anniversary of the grant date.
For 2016, the mix was provided for in the Agreement and Plan of Merger, and is:
Stock Options – 30%
Restricted Stock – 70%
The Committee has historically approved annual long-term incentive awards at its fall meeting, which is scheduled at least one year in advance. The Committee prefers this “mechanical” approach to selecting
the grant date, rather than a “discretionary” approach, as it avoids having to make arbitrary judgments regarding timing of awards. To the extent newly hired or promoted executives receive an initial award of stock options, the options are priced at the closing price on a date no earlier than their actual start or approval date.
Performance Awards.The BoardCommittee awarded PRSUs to drive performance against Committee established goals over a three-year period. They are intended to not only encourage and reward performance against these goals but also to assist in retention of Directorskey employees, as any PRSUs earned by performance cliff vest three years from the date of grant. Generally, both the performance and Stockholderscontinued employment requirements must be satisfied in order for the executive to earn a payout under the award. The performance goals are established by the Committee no later than its first meeting of
For 2015, 40% of each officer’s target long-term incentive grant value was made up of PRSUs. The target number of PRSUs subject to any individual award was determined by dividing 40% of the long-term grant value targeted for that individual by the “grant date fair value” of the awards. See Footnote No. 3 to the Summary Compensation Table for the calculation of the grant date fair value.
For 2015, the Committee chose two performance goals for PRSUs: 50% of each grant was given an ROIC goal, and 50% a TSR goal.
·ROIC PRSUs. The Committee chose ROIC as of December 31, 2014 and 2013, anda goal because it is a generally accepted benchmark to measure the return a company generates on the capital invested in its business. Performance against the ROIC target goal is determined by averaging our performance against the ROIC goal set by the Committee for each of the three years of their respective performance periods. The ROIC target for 2015 was set at 11.4-12.0%. The Committee determined performance against the 2015 goal to be 14.2%, or 184.6% of target. This performance level was and will be used as one of the three-year annual performance calculations to determine the actual number of shares earned under the PRSU awards for which 2015 was a performance period.
·TSR PRSUs. The Committee chose TSR as a goal in order to directly align the interests of our executives with those of our stockholders. Performance against the TSR goal is determined by comparing the performance of our TSR with that of the OSX over the three-year performance period of the PRSUs. The Committee determined that the OSX is an appropriate benchmark against which to compare our TSR performance for the reasons discussed above in “Peer Groups.”
The number and value of PRSUs for 2015 that could actually be earned was determined by performance against the goals established by the Committee and can range from 0 to 200% of the target value, depending upon performance.
The following table summarizes how performance against the ROIC goal is measured, and with the exception noted below the table, how the TSR goal is measured.
| Performance & Payout | |
| 2015 | |
Objective | Performance Against Goal | Percentage of Target Payout |
ROIC | Less than 75% | 0 |
| 75% | 37.5 |
| 97.5% - 102.5% | 100 |
| 125% | 200* |
TSR | Less than 25th Percentile | 0 |
| 25th to 50th Percentile | 50-99* |
| 50th to 80th Percentile | 100-199 |
| 80th Percentile or greater | 200 |
In the event of a negative TSR, any payout would have been capped at Target irrespective of our ranking relative to the OSX companies’ performance.
For the PRSUs granted in 2013 with a three-year performance period of 2013 through 2015, 50% of which had an ROIC goal and 50% of which had a TSR goal, the performance level attained was determined as follows:
2013-2015 PRSU Payout
| |||
Objectives | Percent of | Weight | Payout |
ROIC | 126% | 50% | 63.0% |
TSR | 200% | 50% | 100.0% |
|
|
|
|
Total Payout |
|
| 163.0% |
Stock Options. The Committee awards stock options to make a portion of executive officers’ total direct compensation contingent on long-term stock price appreciation. In October 2014, each executive officer, including the NEOs (other than Mr. Moore), received an award of stock options for 2015, and in October 2015 (other than Mr. Moore) for 2016. The number of options for each individual award made in 2014 for 2015 was determined by taking 40% of the long-term incentive grant value targeted for that individual and dividing it by the grant date fair value of a stock option. The number of options for each individual award made in 2015 for 2016 was determined by taking 30% of the long-term incentive grant value targeted for each individual for 2015 and dividing it by the grant date fair value of a stock option. See Footnote No. 3 to the Summary Compensation Table for the calculation of the “grant date fair value.”
The exercise price for all our stock option awards, including those for 2015 and for 2016, is equal to the closing share price on the date of grant. Stock options vest over a three-year period, with one-third of the options vesting per year, beginning on the first anniversary of the grant date. Stock options have a ten-year term.
Restricted Stock Units. The Committee awards RSUs to encourage and promote retention. The number of RSUs for any individual award made in 2014 for 2015 and in 2015 for 2016 was determined by taking 20% or 70%, respectively, of the 2015 long-term incentive grant value targeted for that individual and dividing it by the closing price of our Common Stock on the date of grant.
RSU awards generally vest over a three-year period, with one-third vesting per year beginning on the first anniversary of the grant date.
To ensure that certain deduction limits under Section 162(m) of the Internal Revenue Code not apply to RSU awards (see “Tax Implications of Executive Compensation” on page 50), RSU awards for our executive officers, including our NEOs, require that we generate $50 million of net income in the year following the year in which the grant is made (e.g., awards made in October 2014 for 2015 require more than $50 million of net income in 2015) as a condition to the RSUs being earned and eligible for vesting.
Benefits, Retirement Programs and Perquisites. We provide our executive officers with benefits and perquisites that the Committee has concluded are reasonable to assist in attracting and retaining qualified executives. These benefits are generally the same as those broadly available to all our U.S. salaried employees, except for a nonqualified deferred compensation plan made available to our more highly compensated employees, including NEOs and other executives. This plan is intended to restore benefits of income deferral that would otherwise be lost due to federal tax limitations using the same funding formula used for other eligible employees. Perquisites include only financial planning services and the opportunity for senior vice presidents and higher ranked officers to use company-leased aircraft for personal travel provided they reimburse us for the incremental operating costs. Each year, the Committee reviews the appropriateness of both the nature and type of benefits and perquisites, and the associated values and costs.
Benefits and Retirement Programs. We provide our executive officers, including our CEO and the other NEOs, the same health and welfare benefits that are broadly available to our U.S. non-union employees, with no additional related benefits, programs or special features.
In addition to our Retirement Savings Plan, which is a qualified deferred compensation plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (“Code”), and in which all U.S. employees, including executive officers, who meet the age, service and other requirements of the plan are eligible to participate, we offer a deferred compensation plan to more highly compensated employees, including executives. We do not provide defined benefit plans to executive officers. Our Deferred Compensation Plan is a nonqualified defined contribution plan. It is designed to allow deferral of income from base salary and annual bonus and company contributions that could have been made under our Retirement Savings Plan but for IRS limitations on deferrals of compensation into a tax-qualified plan. There is no “above-market” interest or preferential earnings element credited on any deferred compensation as defined in applicable SEC rules relating to disclosures on proxy statements.
Perquisites. Our executive officers, including the NEOs, are eligible to receive financial planning services. The Committee believes it is in the interest of our Company to assist executives in the handling of their personal finances, particularly tax filing obligations, to prevent them from being a distraction to the executive or an embarrassment to us. The cost of such services is imputed to the executive as income.
Our executive officers are reimbursed for the cost of spousal travel if there is a business purpose for the spouse to accompany the executive to a function or event. The cost of any such travel is imputed to the executive as income. The CEO and COO and Senior Vice Presidents are also eligible to use company-leased aircraft for personal travel, provided they reimburse us for the incremental operating cost of any such use.
We do not provide any tax gross-ups for any reported income related to such perquisites.
The cost to us of all benefits and perquisites provided to our executive officers is included in the Committee’s independent compensation consultant’s competitive analysis and in the annual tally sheet presentation to the Committee on total compensation paid to executives.
Part V — Other Matters Affecting Our Executive Compensation
Clawback of Incentive Compensation. We have an executive compensation clawback policy. Under that policy, which has been incorporated into awards under our annual and long-term incentive plans, should any executive officer commit fraud or intentional wrongdoing which results in a required financial restatement, we have the right to recover incentive and performance compensation paid or awarded to such executive officer within the past five years for the year restated and for the two years prior to any year of restatement.
Prohibition of Derivative, Hedging, and Pledging Transactions. We have a policy which regulates the trading in our securities by directors, officers and key employees. In addition to dealing with such matters as quarterly blackouts and Rule 10b5-1 trading, it prohibits derivative and hedging transactions involving Cameron securities and also prohibits pledging and otherwise using Cameron securities as collateral and holding Cameron securities accounts that are margined.
Stock Ownership Requirements. We have stock ownership requirements for executives and other key employees. Within five years of being appointed an executive or other key employee of our company, or being promoted to a position requiring increased ownership, the executive or employee is required to directly own Common Stock having a market value or cost basis, whichever is higher, equal to at least the following multiple of his or her base salary:
Level | Base Salary |
Chief Executive Officer | 6 |
Chief Operating Officer | 4 |
Executive Vice President | 4 |
Senior Vice President | 3 |
Vice President | 2 |
All Other Executive Long-Term Incentive Program Participants | 2 or 1 |
All NEOs meet or exceed their ownership requirement or are within the five-year period given to achieve compliance. The ownership interests of the NEOs individually, and executives as a whole, are set out in “Security Ownership of Management”.
Employment, Severance and Change-in-Control Arrangements.
Employment Contracts. We have no employment contracts with any of our executive officers.
Executive Severance Policy. We have an Executive Severance Policy for all executive officers, including the NEOs. The Policy provides for salary continuation for 12 months or 24 months, depending on grade level, for a covered executive if such executive’s employment with our Company is terminated by us for any reason other than cause. Participation in the annual incentive plan is prorated through the last day of employment and determined based on achievement of the goals and objectives established for the applicable year, but no entitlements are earned during the severance period. The amount of these payments, had any of the NEOs been terminated for any reason other than cause on December 31, 2014, is set out under the caption “Payments Under Executive Severance Policy.”
We provide executive severance because we recognize the impact on individuals of our need to be able to freely make changes at the executive level, and of the relatively more difficult employment transition encountered when executive-level employees are terminated with possibly little to no notice.
Change-in-Control Agreements. We have change-in-control agreements with 21 executive officers, including each of our NEOs, except Mr. Moore, whose agreement terminated when his intent to retire was announced in May 2015. Payment under each of these agreements would only be made if the executive officer were to be terminated in connection with a change in control (“double trigger”). The agreements entitle the executive, if the executive is discharged without “cause” or resigns for “good reason” in conjunction with or within two years of a “change in control,” to a payment equal to a multiple of: (i) base salary; (ii) the higher of the officer’s target annual incentive award for the year of termination or highest such award earned by the officer during any of the past three years; and (iii) the value of annual benefits and perquisites. The multiple varies from 3X to 1X, depending on when the agreement was entered into and job level. Agreements entered into prior to 2009 had a multiple of 3X, and those entered into since have a 2X multiple for positions classified as a “Tier 1” executive, which NEOs would be, and a 1X multiple for others. Agreements with Messrs. Lemmer and Sledge have a 3X multiple as they predated the change in policy. The agreements with Messrs. Jones and Geiger have a 2X as they were entered into after the change. The multiple in the agreement with Mr. Rowe was changed from 2X to 3X effective as of the date he became CEO. In addition, certain agreements, including those with Messrs. Sledge and Lemmer, provided that, if any payments made under the agreement would cause the applicable executive to be subject to an excise tax because the payment is a “parachute payment” (as defined in the Internal Revenue Code), then we will pay the executive an excise tax premium in a sufficient amount to make the executive whole with respect to any additional tax that would not have been payable but for the excise tax provision. “Cause” means (i) a conviction by a court of competent jurisdiction, from which no further appeal can be taken, of a felony grade crime involving moral turpitude, or (ii) a willful failure to perform substantially one’s duties with our company (other than a failure due to physical or mental illness) which is materially and demonstrably injurious to us. No act or failure to act will be considered “willful” unless done, or omitted to be done, in bad faith and without reasonable belief that the action or omission was in, or not opposed to, our best interests.
“Good reason” for termination includes any of the following events that occur without the executive officer’s consent: a change in status, title(s) or position(s) as an officer of our company that is not a promotion; a reduction in base salary; termination of participation in an ongoing compensation plan; relocation; failure of a successor of our company to assume the objectives under the agreement; termination by us other than for cause; prohibition from engaging in outside activities permitted by the agreement; or any continuing material default by us in the performance of our obligations under the agreement.
A “change in control” of our company will occur, for purposes of these agreements, if (i) any person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or indirectly, of our securities representing 20% or more of the combined voting power of our outstanding voting securities, other than through the purchase of voting securities directly from us through a private placement; (ii) the current members of the Board, or subsequent members approved by two-thirds of the current members, no longer comprise a majority of the Board; (iii) our company is merged or consolidated with another corporation or entity and our stockholders own less than 70% of the outstanding voting securities of the surviving or resulting corporation or entity; (iv) our company is merged or consolidated with another corporation or entity and the consideration paid is part or all cash equivalent in value equal to 31% or more of our outstanding voting securities; (v) a tender offer or exchange offer is made and consummated by a person other than our company for the ownership of 20% or more of our voting securities; or (vi) there has been a disposition of all or substantially all of our assets. We recognized that, as is the case with many publicly held corporations, the possibility of a change in control could arise and that such possibility, and the uncertainty and questions it could raise among our executive officers, could cause a distraction and result in the departure of one or more of them to our Company’s and our stockholders’ detriment. The Committee has determined that it was in the best interests of our company and our stockholders to help assure the continuation of service by certain executive officers, and to reinforce and encourage their attention and dedication to their assigned duties without distraction in circumstances arising from the possibility of a change in control. The Committee believed it important, when we or our stockholders receive a proposal for or notice of a change in control, or consider one ourselves, that we maintain a sound and vital management team and our executives be able to assess and advise our Company as to whether such transaction would be in the best interests of our company and our stockholders, and to take such other action regarding the transaction as our Board of Directors determines to be appropriate, without being influenced by the uncertainties of their own situations. We also believe that entering into change-in-control agreements with some of our executive officers has helped us attract and retain the level of executive talent needed to achieve our goals.
The elements of the severance benefits and the amounts of each were approved by the Committee at the time the agreements were entered into, or most recently modified, based on the Committee’s assessment of what was appropriate and competitive at that time.
The transaction provided for by the Agreement and Plan of Merger will constitute a “change in control” under our Change-in-Control Agreements when the transaction is closed and the merger accomplished. As discussed earlier, payouts to be made pursuant to these Change-In-Control Agreements, should the transaction provided for by the stockholder-approved Agreement and Plan of Merger occur, were approved by an advisory Golden Parachute vote of stockholders.
Tax Implications of Executive Compensation. Section 162(m) of the Code places a limit of $1 million on the amount of annual compensation that may be deducted by us in any year with respect to an NEO. Certain performance-based compensation subject to performance criteria approved by stockholders is not subject to this deduction limitation and, as a result, annual incentive compensation paid pursuant to our Management Incentive Compensation Plan and stock options, RSU and PRSU awards granted under our Equity Incentive Plan generally are intended to qualify as performance-based compensation and should be deductible.
The Committee is mindful of the limitation and has structured the various elements of our executive compensation to fall within the limit or the exception. The Committee and/or the Board of Directors,
however, may from time to time, in circumstances deemed appropriate, award compensation that may not be deductible, in order to, in their judgment, compensate executives in a manner commensurate with performance and the competitive market for executive talent.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned for services rendered to us by our NEOs for the fiscal year ended December 31, 2015.
Some differences in the compensation of our NEOs result from the fact that our compensation philosophy is to pay competitively by position. In order to determine competitive levels, the independent compensation consultant, at the direction of the Compensation Committee, benchmarks each position against employees holding similar positions in our peer group and in the manufacturing industry in general. Our compensation policy and benchmarking practices are explained in the CD&A section set out earlier in this Item 11 of the Form 10-K/A.
Name and Principal | Year | Salary ($) | Bonus | Stock | Option | Non-Equity | Change in | All Other | Total |
R. Scott Rowe |
2015 |
729,842 |
|
6,708,125 |
2,038,583 |
1,262,015 |
(3,796) |
151,188 |
10,885,957 |
President and CEO | 2014 | 486,338 |
| 1,019,919 | 999,744 | 525,946 | 14,741 | 103,019 | 3,149,707 |
Jack B. Moore | 2015 | 865,385 |
| 2,839,967 | 0 | 1,880,156 | (83,287) | 291,502 | 5,793,723 |
Chairman and | 2014 | 1,125,000 | 0 | 4,139,894 | 2,839,314 | 1,814,400 | 128,053 | 217,626 | 10,264,287 |
CEO | 2013 | 1,125,000 | 0 | 3,919,852 | 2,719,985 | 644,288 | 231,647 | 304,309 | 8,945,081 |
Charles M. Sledge | 2015 | 652,100 |
| 2,492,434 | 682,110 | 906,732 | 150,225 | 152,659 | 5,036,260 |
Sr. Vice President & | 2014 | 646,490 | 0 | 1,329,921 | 899,780 | 695,106 | (15,359) | 110,797 | 3,666,735 |
Chief Financial Officer | 2013 | 617,500 | 0 | 1,319,937 | 879,991 | 246,012 | 184,452 | 137,892 | 3,385,784 |
William C. Lemmer | 2015 | 556,200 |
| 1,941,450 | 529,190 | 676,712 | 3,207 | 125,174 | 3,831,933 |
Sr. Vice President & | 2014 | 552,088 | 0 | 1,032,899 | 705,828 | 519,404 | 151,815 | 102,270 | 3,064,304 |
General Counsel | 2013 | 535,000 | 41,832 | 1,019,883 | 679,996 | 269,265 | 503,685 | 115,527 | 3,165,188 |
Steven P. Geiger Vice President & Chief Administrative Officer | 2015 | 450,000 | 0 | 1,319,955 | 359,798 | 508,394 | (500) | 100,750 | 2,738,397 |
Hunter W. Jones Vice President & President, Drilling Systems | 2015 | 397,300 | 0 | 989,889 | 269,845 | 409,114 | (5,486) | 88,743 | 2,149,413 |
(1)No information is reported for Mr. Rowe for 2013, and Messrs. Geiger and Jones for 2014 and 2013, as they were not named executive officers under the rules of the SEC for those years.
(2)The amounts included in the “Stock Awards” and “Option Awards” columns represent the “grant date fair value” in 2015, 2014 and 2013 as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, regarding Stock Compensation (“ASC 718”).
(3)The “grant date fair value” for Stock Awards awarded as (i) PRSUs with an ROIC goal is $49.95 per share, the closing price of Common Stock on 1/1/2015, the date of grant, (ii) PRSUs with a TSR goal is $57.17, calculated using a Monte Carlo valuation as of 1/1/2015, the date of grant; and for Mr. Rowe’s October 5, 2015 award it is $96.83; and (iii) RSUs is $65.97, based on the closing price of Common Stock on 10/14/2015, the date of grant.
(4)The “grant date fair value” for Option Awards is $14.46, calculated in accordance with ASC 718, and based on an exercise price equal to the closing price of Common Stock of $65.97 per share on 10/14/2015, the date of grant.
(5)For both RSU and stock option grants, the value shown is what is reflected in our financial statements. See Cameron’s Annual Report on Form 10-K for the year ended December 31, 2015, and Annual Reports for the years ended December 31, 2014 and 2013 for a complete description of the valuation assumptions. Amounts included for 2015 PRSUs represent target. Threshold, target and maximum award levels for the PRSUs are shown in the table below:
Name | Threshold ($) | Target ($) | Maximum ($) |
R. Scott Rowe | 437,476 | 999,951 | 1,999,902 |
| 226,727 | 518,232 | 1,036,464 |
Jack B. Moore | 1,242,486 | 2,839,967 | 5,679,934 |
Charles M. Sledge | 393,742 | 899,985 | 1,799,969 |
William C. Lemmer | 308,858 | 705,964 | 1,411,928 |
Steven P. Geiger | 209,985 | 479,959 | 959,919 |
Hunter W. Jones | 157,474 | 359,941 | 719,882 |
(6)PRSUs granted on January 1, 2014, and included in the Stock Awards values reported in the 2015 Summary Compensation Table are valued not at “grant date fair value” but at a value that includes the actual impact of performance achievement, which was known at the
time of disclosure. These PRSUs have issuedbeen revalued using the “grant date fair value” for the 2014 Stock Awards in this Summary Compensation Table.
(7)The amount shown for each NEO in the “Non-Equity Incentive Plan Compensation” column is attributable to MICP annual incentive compensation awards earned in fiscal years 2015, 2014, and 2013, but paid in 2016, 2015 and 2014, respectively.
(8)The amounts shown in this column reflect market-based returns on balances held under our report thereon dated February 20,deferred compensation plans.
(9)The figures set out as “All Other Compensation” for 2015 (includedare the sum of the Total Other Annual Compensation attributable to both (i) retirement benefits and (ii) welfare benefits and perquisites and are set out in the following two tables:
(i)Retirement Benefits
Name | Company | Company | Company | Total Other |
R. Scott Rowe | 23,840 | 29,724 | 59,447 | 113,011 |
Jack B. Moore | 23,850 | 72,444 | 144,887 | 241,181 |
Charles M. Sledge | 23,848 | 32,466 | 64,932 | 121,247 |
William C. Lemmer | 23,850 | 24,318 | 48,636 | 96,804 |
Steven P. Geiger | 23,850 | 15,030 | 30,061 | 68,941 |
Hunter W. Jones | 23,850 | 13,621 | 20,851 | 58,322 |
(ii)Welfare Benefits and Perquisites
Name | Spousal | Excess | Welfare | Financial | Total Other Annual |
R. Scott Rowe | 10,542 | 1,140 | 18,350 | 8,145 | 38,176 |
Jack B. Moore | 21,148 | 5,788 | 15,174 | 8,211 | 50,321 |
Charles M. Sledge | 0 | 2,622 | 18,658 | 10,132 | 31,412 |
William C. Lemmer | 0 | 14,832 | 3,718 | 9,820 | 28,370 |
Steven P. Geiger | 0 | 6,732 | 15,015 | 10,062 | 31,808 |
Hunter W. Jones | 0 | 3,842 | 18,370 | 8,209 | 30,422 |
(1)Spousal travel costs are costs incurred by us when a spouse accompanies an NEO to a function or event for business purposes. This cost is imputed to the NEO as income.
(2)Welfare benefits are the employer-paid portions of premiums for Medical (including Health Savings Account Contribution), Dental, Life, AD&D and LTD paid for the benefit of the employee.
Grants of Plan-Based Awards in Fiscal Year 2015
The following table provides information on non-equity incentive plan awards, stock options PRSUs and RSUs granted, and the grant date fair value of these awards.
|
|
|
|
|
|
|
| Estimated Future Payouts Under |
| All Other |
| All Other |
| Exercise |
| Grant Date |
| ||||
Name |
| Award Type |
| Grant |
| Committee |
| Threshold |
| Target |
| Maximum |
| Stock or |
| Underlying |
| Option |
| Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Scott Rowe |
| Annual MICP |
| 1/1/2015 |
| 2/18/2015 |
| 263,207 |
| 656,858 |
| 1,313,716 |
|
|
|
|
|
|
|
|
|
|
| PRSU |
| 1/1/2015 |
| 10/16/2014 |
|
|
|
|
|
|
| 18,755 |
|
|
|
|
| 999,951 |
|
|
| Special PRSU |
| 10/05/2015 |
| 8/21/2015 |
|
|
|
|
|
|
| 6,738 |
|
|
|
|
| 518,232 |
|
|
| Special RSU |
| 10/05/2015 |
| 8/21/2015 |
|
|
|
|
|
|
| 8,126 |
|
|
|
|
| 518,358 |
|
|
| Annual RSU |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
| 72,154 |
|
|
|
|
| 4,759,999 |
|
|
| Annual Option |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
|
|
| 140,981 |
| 65.97 |
| 2,038,853 |
|
Jack B. Moore |
| Annual MICP |
| 1/1/2015 |
| 2/18/2015 |
| 392,127 |
| 1,081,731 |
| 2,163,463 |
|
|
|
|
|
|
|
|
|
|
| PRSU |
| 1/1/2015 |
| 10/16/2014 |
|
|
|
|
|
|
| 53,266 |
|
|
|
|
| 2,839,967 |
|
Charles M. Sledge |
| Annual MICP |
| 1/1/2015 |
| 2/18/2015 |
| 189,109 |
| 521,680 |
| 1,043,360 |
|
|
|
|
|
|
|
|
|
|
| PRSU |
| 1/1/2015 |
| 10/16/2014 |
|
|
|
|
|
|
| 16,880 |
|
|
|
|
| 899,985 |
|
|
| Annual RSU |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
| 24,139 |
|
|
|
|
| 1,592,450 |
|
|
| Annual Option |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
|
|
| 47,166 |
| 65.97 |
| 682,110 |
|
William C. Lemmer |
| Annual MICP |
| 1/1/2015 |
| 2/18/2015 |
| 141,136 |
| 389,340 |
| 778,680 |
|
|
|
|
|
|
|
|
|
|
| PRSU |
| 1/1/2015 |
| 10/16/2014 |
|
|
|
|
|
|
| 13,241 |
|
|
|
|
| 705,964 |
|
|
| Annual RSU |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
| 18,728 |
|
|
|
|
| 1,235,486 |
|
|
| Annual Option |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
|
|
| 36,592 |
| 65.97 |
| 529,190 |
|
Steven P. Geiger |
| Annual MICP |
| 1/1/2015 |
| 2/18/2015 |
| 106,031 |
| 292,500 |
| 585,000 |
|
|
|
|
|
|
|
|
|
|
| PRSU |
| 1/1/2015 |
| 10/16/2014 |
|
|
|
|
|
|
| 9,002 |
|
|
|
|
| 479,959 |
|
|
| Annual RSU |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
| 12,733 |
|
|
|
|
| 839,996 |
|
|
| Annual Option |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
|
|
| 24,879 |
| 65.97 |
| 359,798 |
|
Hunter W. Jones |
| Annual MICP |
| 1/1/2015 |
| 2/18/2015 |
| 106,557 |
| 247,000 |
| 494,000 |
|
|
|
|
|
|
|
|
|
|
| PRSU |
| 1/1/2015 |
| 10/16/2014 |
|
|
|
|
|
|
| 6,751 |
|
|
|
|
| 359,941 |
|
|
| Annual RSU |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
| 9,549 |
|
|
|
|
| 629,948 |
|
|
| Annual Option |
| 10/14/2015 |
| 10/13/2015 |
|
|
|
|
|
|
|
|
| 18,659 |
| 65.97 |
| 269,845 |
|
(1)A discussion of grant practices is included in Part II, Item 8IV – Executive Compensation Elements and Mix.
(2)The 2015 MICP annual incentive compensation objectives were approved in December, 2014. Actual payout amounts of the 2015 MICP awards were approved in February 2016 and are included as 2015 compensation in the Summary Compensation Table.
(3)The amounts shown reflect the range of possible MICP annual incentive compensation awards. In October 2014, our Compensation Committee established target MICP annual incentive compensation awards for 2015, expressed as a percentage of each NEO’s 2015 base salary. The percentages are noted in “Target-Award Opportunities”. In February 2015, the Committee approved individual and company performance objectives for the MICP for 2015. The dollar amount shown in the “target” column represents the target award of each NEO for 2015. The amount shown in the “maximum” column represents the maximum amount that could be paid under the MICP for 2015. The amount shown in the “threshold” column represents the amount payable if only the minimum level of company achievement of performance objectives were attained. Please see Part IV – Executive Compensation Elements and Mix — Annual Incentive Compensation” for more information regarding our MICP and the 2013 MICP awards and performance measures.
(4)The amounts included in the “Grant Date Fair Value of Stock and Option Awards” column represent the fair value on the date of grant. See Footnote No. 2 and 3 to the Summary Compensation Table for information regarding the grant date fair value of these awards.
(5)Mr. Rowe received a one-time grant with a value of $1,036,717 to reflect the fact that he would serve as Chief Executive Officer in the fourth quarter of 2015.
Outstanding Equity Awards at Fiscal Year-End
The following table presents information about outstanding stock option awards classified as “exercisable” and “unexercisable” as of December 31, 2015, for our two CEOs that served for portions of 2015, our Chief Financial Officer and the two other NEOs, as well as RSU and PRSU awards to the NEOs that were not yet vested as of December 31, 2015.
|
| Option Awards |
| Stock Awards |
| ||||||||||||
Name |
| Option |
| Number of |
| Number of |
| Option |
| Option |
| Restricted |
| Number of |
| Market |
|
R. Scott Rowe |
| 11/06/2009 |
| 2,548 |
| 0 |
| 39.24 |
| 2016 |
| 01/01/2013 |
| 7,101 |
| 448,783 |
|
|
| 10/20/2010 |
| 2,335 |
| 0 |
| 42.81 |
| 2017 |
| 10/17/2013 |
| 2,667 |
| 168,554 |
|
|
| 11/16/2011 |
| 20,732 |
| 0 |
| 51.24 |
| 2021 |
| 01/01/2014 |
| 8,656 |
| 547,059 |
|
|
| 10/18/2012 |
| 25,510 |
| 0 |
| 56.05 |
| 2022 |
| 10/16/2014 |
| 8,685 |
| 548,892 |
|
|
| 10/17/2013 |
| 21,412 |
| 10,706 |
| 64.97 |
| 2023 |
| 01/01/2015 |
| 18,755 |
| 1,185,316 |
|
|
| 10/16/2014 |
| 22,973 |
| 45,944 |
| 57.57 |
| 2024 |
| 10/05/2015 |
| 14,864 |
| 939,405 |
|
|
| 10/14/2015 |
| 0 |
| 140,981 |
| 65.97 |
| 2025 |
| 10/14/2015 |
| 72,154 |
| 4,560,133 |
|
Jack B. Moore |
| 10/20/2010 |
| 212,665 |
| 0 |
| 42.81 |
| 2017 |
| 10/18/2012 |
| 7,612 |
| 481,078 |
|
|
| 11/16/2011 |
| 176,917 |
| 0 |
| 51.24 |
| 2021 |
| 01/01/2013 |
| 45,449 |
| 2,872,377 |
|
|
| 10/18/2012 |
| 163,265 |
| 0 |
| 56.05 |
| 2022 |
| 10/17/2013 |
| 13,954 |
| 881,893 |
|
|
| 10/17/2013 |
| 110,977 |
| 57,027 |
| 64.97 |
| 2023 |
| 01/01/2014 |
| 45,283 |
| 2,861,886 |
|
|
| 10/16/2014 |
| 65,243 |
| 130,484 |
| 57.57 |
| 2024 |
| 10/16/2014 |
| 24,665 |
| 1,558,828 |
|
|
|
|
|
|
|
|
|
|
|
|
| 01/01/2015 |
| 53,266 |
| 3,366,411 |
|
Charles M. Sledge |
| 11/06/2009 |
| 2,548 |
| 0 |
| 39.24 |
| 2016 |
| 10/18/2012 |
| 2,616 |
| 165,331 |
|
|
| 10/20/2010 |
| 99,900 |
| 0 |
| 42.81 |
| 2017 |
| 01/01/2013 |
| 15,623 |
| 987,374 |
|
|
| 11/16/2011 |
| 55,286 |
| 0 |
| 51.24 |
| 2021 |
| 10/17/2013 |
| 4,514 |
| 285,285 |
|
|
| 10/18/2012 |
| 56,122 |
| 0 |
| 56.05 |
| 2022 |
| 01/01/2014 |
| 14,650 |
| 925,880 |
|
|
| 10/17/2013 |
| 36,236 |
| 18,118 |
| 64.97 |
| 2023 |
| 10/16/2014 |
| 7,816 |
| 493,971 |
|
|
| 10/16/2014 |
| 20,676 |
| 41,350 |
| 57.57 |
| 2024 |
| 01/01/2015 |
| 16,880 |
| 1,066,816 |
|
|
| 10/14/2015 |
| 0 |
| 47,166 |
| 65.97 |
| 2025 |
| 10/14/2015 |
| 24,139 |
| 1,525,585 |
|
William C. Lemmer |
| 11/06/2009 |
| 2,548 |
| 0 |
| 39.24 |
| 2016 |
| 10/18/2012 |
| 2,022 |
| 127,790 |
|
|
| 10/20/2010 |
| 64,900 |
| 0 |
| 42.81 |
| 2017 |
| 01/01/2013 |
| 12,071 |
| 762,887 |
|
|
| 11/16/2011 |
| 49,758 |
| 0 |
| 51.24 |
| 2021 |
| 10/17/2013 |
| 3,488 |
| 220,442 |
|
|
| 10/18/2012 |
| 43,367 |
| 0 |
| 56.05 |
| 2022 |
| 01/01/2014 |
| 11,320 |
| 715,424 |
|
|
| 10/17/2013 |
| 28,001 |
| 14,000 |
| 64.97 |
| 2023 |
| 10/16/2014 |
| 6,131 |
| 387,479 |
|
|
| 10/16/2014 |
| 16,219 |
| 32,437 |
| 57.57 |
| 2024 |
| 01/01/2015 |
| 13,241 |
| 836,831 |
|
|
| 10/14/2015 |
| 0 |
| 36,592 |
| 65.97 |
| 2025 |
| 10/14/2015 |
| 18,728 |
| 1,183,610 |
|
|
|
|
|
|
|
|
|
|
|
|
| 10/18/2012 |
| 654 |
| 41,333 |
|
Steven P. Geiger |
| 10/17/2013 |
| 16,471 |
| 8,235 |
| 64.97 |
| 2023 |
| 02/04/2013 |
| 3,090 |
| 195,288 |
|
|
| 10/16/2014 |
| 11,027 |
| 22,053 |
| 57.57 |
| 2025 |
| 06/10/2013 |
| 1,605 |
| 101,436 |
|
|
| 10/14/2015 |
| 0 |
| 24,879 |
| 65.97 |
| 2016 |
| 10/17/2013 |
| 2,052 |
| 129,686 |
|
|
|
|
|
|
|
|
|
|
|
|
| 01/01/2014 |
| 6,658 |
| 420,786 |
|
|
|
|
|
|
|
|
|
|
|
|
| 10/16/2014 |
| 4,168 |
| 263,418 |
|
|
|
|
|
|
|
|
|
|
|
|
| 01/01/2015 |
| 9,002 |
| 568,926 |
|
|
|
|
|
|
|
|
|
|
|
|
| 10/14/2015 |
| 12,733 |
| 804,726 |
|
Hunter W. Jones |
| 11/16/2011 |
| 11,057 |
| 0 |
| 51.24 |
| 2021 |
| 01/01/2013 |
| 3,905 |
| 246,796 |
|
|
| 10/20/2010 |
| 7,005 |
| 0 |
| 42.81 |
| 2017 |
|
|
|
|
|
|
|
|
| 10/18/2012 |
| 14,030 |
| 0 |
| 56.05 |
| 2022 |
| 10/17/2013 |
| 1,641 |
| 103,711 |
|
|
| 10/17/2013 |
| 13,177 |
| 6,588 |
| 64.97 |
| 2023 |
| 01/01/2014 |
| 5,326 |
| 336,603 |
|
|
| 10/16/2014 |
| 8,270 |
| 16,540 |
| 57.57 |
| 2024 |
| 10/16/2014 |
| 2,084 |
| 131,709 |
|
|
| 10/14/2015 |
| 0 |
| 18,659 |
| 65.97 |
| 2025 |
| 01/01/2015 |
| 6,751 |
| 426,663 |
|
|
|
|
|
|
|
|
|
|
|
|
| 10/14/2015 |
| 9,549 |
| 603,497 |
|
–For better understanding of this table, we have included separate columns to show the grant date of stock options and restricted stock units/performance units.
–Zeroes indicate there are no more unexercisable options available in the award.
(1)Options awarded prior to 2013 are fully vested. The vesting schedules for the option awards made during or after 2013 are as follows:
Grant Date | Option Vesting Schedule | Remaining | |||
10/17/2013 | One-third vests each year for three years from date of grant | 10/17/2016 | |||
10/16/2014 | One-third vests each year for three years from date of grant | 10/16/2016 | |||
10/14/2015 | One-third vests each year for three years from date of grant | 10/14/2016 | |||
(2)The vesting schedules for RSU and PRSU awards are as follows:
Grant Date | RSU Vesting Schedule | Remaining | |||
10/17/2013 | One-third vests each year for three years from date of grant | 01/01/2017 | |||
10/16/2014 | One-third vests each year for three years from date of grant | 01/01/2017 | |||
10/14/2015 | One-third vests each year for three years from date of grant | 01/01/2016 | |||
Grant Date | PRSU Vesting Schedule | Remaining | |||
01/01/2014 | Vests three years from date of grant (performance-based) | 12/31/2016 | |||
01/01/2015 | Vests three years from date of grant (performance-based) | 12/31/2016 12/31/2017 | |||
(3)Based on the closing price of our Common Stock as of December 31, 2015 of $63.20, as reported on the New York Stock Exchange.
Option Exercises and Stock Vested
The following table provides additional information about the value realized by the persons named in the Summary Compensation Table on option exercises and stock award vesting during the year ended December 31, 2015.
|
| Option Awards |
| Stock Awards |
| ||||
|
|
|
|
|
|
|
|
|
|
Name |
| Number of Shares |
| Value |
| Number of Shares |
| Value |
|
|
|
|
|
|
|
|
|
|
|
R. Scott Rowe |
| 12,917 |
| 879,590 |
| 8,448 |
| 430,643 |
|
Jack B. Moore |
| 360,250 |
| 21,592,470 |
| 73,497 |
| 3,588,222 |
|
Charles M. Sledge |
| 59,452 |
| 4,050,496 |
| 24,947 |
| 1,245,940 |
|
William C. Lemmer |
| 10,000 |
| 703,572 |
| 21,997 |
| 1,101,181 |
|
Steven P. Geiger |
| - |
| - |
| 2,632 |
| 138,294 |
|
Hunter W. Jones |
| 0 |
| 0 |
| 5,676 |
| 294,445 |
|
Director Compensation
The compensation program for our non-employee directors has been developed by the Compensation Committee, after consideration of the recommendations and competitive market data provided by FWC, whom the Compensation Committee has retained as its independent compensation consultant. The program has been approved by the full Board. The following sets out the components of the compensation program for our non-employee directors. Employee directors receive no additional compensation for serving on our Board:
Equity Grant Upon Initial Election | $250,000 | ||
Annual Board Retainer | $ 50,000 | ||
Annual Equity Grant1 | $250,000 | ||
Annual Non-Executive Chairman Retainer | $225,000 | ||
Lead Director Retainer | $ 25,000 | ||
Annual Committee Chair Retainer: | |||
Audit Committee | $ 20,000 | ||
Compensation Committee | $ 15,000 | ||
Nominating and Governance Committee | $ 15,000 | ||
Board/Committee Meeting Fee | $ 2,500 | ||
Telephonic Meeting Fee | $ 1,000 | ||
(1) If a director’s election occurs between annual meetings of stockholders, the value of the annual equity grant upon initial election will be a pro-rata portion of the grant value equal to the remaining balance of the board year (the months until the next annual meeting of stockholders
Equity grants, both the initial and annual, are made in the form of deferred stock units, or DSUs. One quarter of each year’s annual equity grant is earned and vests at the end of each quarter of service as a director during that year. Vested DSUs are payable in Common Stock at the earlier of three years from the grant date or the end of Board tenure, unless electively deferred by the director for a longer period. Directors may elect to receive their Board and Committee Chair retainers in cash or defer them under our Deferred Compensation Plan for Non-Employee Directors. Deferral can be made for such periods of time as selected by the director and can be made into Common Stock or cash, at the director’s election. No above-market interest or preferential earnings, as defined for purposes of the SEC’s disclosure rules applicable to proxy statements, are credited or paid on cash deferrals.
Directors are eligible to use company-leased aircraft for personal travel, provided they reimburse us for the incremental operating cost of any such use. Spouses of directors are invited to our annual off-site Board meeting. Directors are reimbursed by us for the cost of their spouses’ travel to and from that meeting.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners
The following table lists the stockholders known by us to have been the beneficial owners of more than 5% of the common stock of Cameron (Common Stock”) outstanding as of December 31, 2015, and entitled to be voted at the Meeting. This information is based on statements filed by the indicated stockholders with the Securities and Exchange Commission (the “SEC”).
Name and Address of Beneficial Owner |
| Number of Shares of |
| Beneficial |
| Percent of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Vanguard Blvd |
| 16,467,347 |
| (1) |
| 8.82% |
|
|
|
|
|
|
|
|
|
BlackRock, Inc. |
|
|
|
|
| 6.40% |
|
|
|
|
|
|
|
|
|
40 East 52nd Street |
| 12,147,825 |
| (2) |
|
|
|
|
|
|
|
|
|
|
|
State Street Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Lincoln Street |
| 9,865,040 |
| (3) |
| 5.20% |
|
(1) | According to a Schedule 13G filed with the SEC by The Vanguard Group, Inc. (“Vanguard”) on February 10, 2016, Vanguard had sole voting power over 351,883 shares of Common Stock, shared voting power over 18,300 shares of Common Stock, sole dispositive power over 16,467,347 shares of Common Stock, and shared dispositive power over 378,264 shares of Common Stock. According to that filing, Vanguard Fiduciary Trust Company, a wholly owned subsidiary of Vanguard, is the beneficial owner of 296,464 shares or 0.15% of the Common Stock outstanding of the Company as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly owned subsidiary of Vanguard, is the beneficial owner of 137,219 shares or 0.07% of Common Stock as a result of its serving as investment manager of Australian investment offerings. | (2) | According to a Schedule 13G filed with the SEC by BlackRock Inc. (“BlackRock”) on February 10, 2016, BlackRock had sole voting power over 10,370,751 shares of Common Stock and sole dispositive power over 12,147,825 shares of Common Stock. According to the filing, various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the Common Stock, but no one person’s interest is more than five percent of the total outstanding Common Stock. | |
(3) | According to a Schedule 13G filed with the SEC by State Street Corporation (“State Street”) on February 12, 2016, State Street had shared voting power and shared dispositive power over 9,865,040 shares of Common Stock. |
Security Ownership of Management
The following table sets forth, as of March 2, 2016, unless otherwise noted, the number of shares of Common Stock beneficially owned (as defined by the SEC) by each current director, director nominee, and each executive officer named in the Summary Compensation Table included herein who is not also a director, and by all directors and executive officers as a group.
Directors |
| Number of Shares of |
| Number of Shares |
| Total |
| Percent of |
| |
|
|
|
|
|
|
|
|
|
| |
H. Paulett Eberhart |
| 10,491 |
| 0 |
| 10,491 |
| * |
| |
Peter J. Fluor |
| 83,935 |
| 0 |
| 83,935 |
| * |
| |
Douglas L. Foshee |
| 41,973 |
| 0 |
| 41,973 |
| * |
| |
James T. Hackett |
| 11,719 |
| 0 |
| 11,719 |
| * |
| |
Rodolfo Landim |
| 18,060 |
| 0 |
| 18,060 |
| * |
| |
Jack B. Moore(2) |
| 286,399 |
| 579,067 |
| 865,466 |
| * |
| |
Michael E. Patrick |
| 66,867 |
| 0 |
| 66,867 |
| * |
| |
Timothy J. Probert |
| 4,823 |
| 0 |
| 4,823 |
| * |
| |
Jon Erik Reinhardsen |
| 36,669 |
| 0 |
| 36,669 |
| * |
| |
R. Scott Rowe(2) |
| 136,224 |
| 95,510 |
| 231,734 |
| * |
| |
Brent J. Smolik |
| 6,524 |
| 0 |
| 6,524 |
| * |
| |
Bruce W. Wilkinson |
| 45,209 |
| 0 |
| 45,209 |
| * |
| |
|
|
|
|
|
|
|
|
|
| |
Executive Officers Named in the Summary Compensation Table Other Than Those Listed Above: |
|
|
|
|
|
|
|
| ||
Charles M. Sledge(2) |
| 159,555 |
| 270,768 |
| 430,323 |
| * |
| |
William C. Lemmer (2) |
| 107,934 |
| 204,793 |
| 312,727 |
| * |
| |
Steven P. Geiger (2) |
| 21,341 |
| 27,498 |
| 45,839 |
| * |
| |
Hunter W. Jones (2) |
| 51,086 |
| 53,539 |
| 104,625 |
| * |
| |
All directors and executive officers |
| 1,149,317 |
| 1,297,844 |
| 2,447,161 |
| 0.012 |
| |
*Indicates ownership of less than one percent of Common Stock outstanding.
(1)Consists of stock options that are currently exercisable or that will become exercisable on or before May 1, 2016.
(2)Includes shares held in our Retirement Savings Plan as of March 2, 2016.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board is composed entirely of independent directors. None of the members of the Committee during 2015 or as of the date of this Form 10-K).10-K/A is or has been an officer or employee of Cameron and no executive officer of Cameron has served on the compensation committee or board of any company that employed any member of our Compensation Committee or the Board.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Policy With Respect to Related Party Transactions. Our audits also includedBoard has adopted a written policy and procedures for the financial statement schedule includedreview of any transaction, arrangement or relationship in Item 15(a)(2)which Cameron is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% or greater stockholders (or their immediate family members) (each, a “related person”) has a direct or indirect material interest.
If a related person proposes to enter into such a transaction, arrangement or relationship (a “related-person transaction”), the related person must report the proposed transaction and the Board’s Nominating and Governance Committee (for purposes of this Form 10-K. This scheduleSection, the “Committee”) will review, and if appropriate, approve the proposed related-person transaction. Any related-person transaction that is ongoing in nature will be reviewed annually.
A related-person transaction will be considered approved or ratified if it is authorized by the responsibilityCommittee after full disclosure of the Company’srelated person’s interest in the transaction. As appropriate for the circumstances, the Committee will review and consider: the approximate dollar value of the amount involved; the related person’s involvement in the negotiation of the terms and conditions, including the price of the transaction; the related person’s interest in the related-person transaction; whether the transaction was undertaken in the ordinary course of our business; whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party; the purpose of, and the potential benefits to us of, the transaction; and any other information regarding the transaction or the related person in the context of the proposed transaction that the Committee determines to be relevant to its decision to either approve or disapprove the transaction.
The Committee will approve or ratify the transaction only if the Committee determines that, under all of the circumstances, the transaction is not inconsistent with Cameron’s best interests.
The Committee may impose any conditions on the related-person transaction that it deems appropriate.
In addition to the transactions that are excluded by the instructions to the SEC’s related-person transaction disclosure requirements, the Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related-person transactions for purposes of this policy: 1) interests arising solely from the related person’s position as an executive officer of another entity that is a participant in the transaction, where: (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, (c) the amount involved in the transaction equals less than the greater of $1 million or 2% of the annual consolidated gross revenues of the other entity that is a party to the transaction, and (d) the amount involved in the transaction equals less than 2% of our company’s annual consolidated gross revenues; and 2) a
transaction that is specifically contemplated by provisions of our Certificate of Incorporation or Bylaws, such as a contract of indemnity.
During 2015, there were no Related-Person Transactions.
Director Independence. Our Board believes that a majority of our directors should be independent, as defined under the standards adopted by the New York Stock Exchange (“NYSE”). The Board makes an annual determination as to the independence of each of the directors. Under the NYSE standards, no director can qualify as independent unless the Board affirmatively determines that the director has no material relationship with our company that might interfere with the exercise of his or her independence from our management. Our responsibility is to express
In evaluating each director’s independence, the Board considers all relevant facts and circumstances in making a determination of independence. In particular, when assessing the materiality of a director’s relationship with our company, the Board considers the issue not merely from the standpoint of the director, but also from the standpoint of persons or organizations with which the director has an opinionaffiliation. In its determination of independence, the Board reviewed and considered all relationships and transactions between each director, his or her family members or any business, charity or other entity in which the director has an interest, and Cameron, its affiliates, or any entity in which our senior management has an interest. As a result of this review, and based on the NYSE standards of independence, the Board affirmatively determined that Ms. Eberhart and each of Messrs. Fluor, Foshee, Landim, Patrick, Probert, Reinhardsen, Smolik and Wilkinson are independent from Cameron and its management. In addition, the Board affirmatively determined that each of the members of the Audit Committee is independent under the additional standards for audit committee membership under SEC rules. Mr. Moore and Mr. Rowe are not independent directors, as Mr. Moore is a former Cameron employee and Mr. Rowe is a current Cameron employee.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Principal Accounting Firm Fees
The following table sets forth the U.S. dollar equivalent fees billed or to be billed by our audits.
|
| Year Ended |
| ||
|
|
|
|
|
|
|
| 2015 |
| 2014 |
|
Audit Fees(1) |
| 6,878,469 |
| 8,205,334 |
|
Audit-Related Fees: |
|
|
|
|
|
Benefit plan audits |
| 51,824 |
| 207,062 |
|
Other |
| 4,000 |
| 306,080 |
|
|
| 55,824 |
| 513,142 |
|
Tax Fees: |
|
|
|
|
|
Tax compliance, consulting and advisory services |
| 1,917,825 |
| 1,978,569 |
|
|
|
|
|
|
|
TOTAL |
| 8,852,118 |
| 10,697,045 |
|
(1)Included within Audit Fees are services for our opinion, the financial statement schedule referred to above, when considered in relation to the basicannual audits of our consolidated financial statements takenand of our internal control over financial reporting, quarterly reviews and international statutory audits required by various government authorities.
The Audit Committee performs an annual review and approves the scope of services and proposed fees of our principal accounting firm. The Audit Committee concluded that the provision of services, other than audit services, in 2015 was compatible with maintaining the accounting firm’s independence from us.
Pre-Approval Policies and Procedures
An Audit Committee policy requires advance approval of the Committee for all audit and audit-related services as a whole, presents fairly,well as tax and other services performed by the independent registered public accountants. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously approved with respect to that year, the Audit Committee must approve the permitted service before the independent registered public accountant is engaged to perform it. The Audit Committee has delegated to the Chairman of the Audit Committee authority to approve permitted services, provided that the Chairman reports any such decisions to the Audit Committee at its next regular meeting. None of the services related to the Audit-Related Fees or Tax Fees reflected in all material respects, the informationtable above were approved by the Audit Committee pursuant to the waiver of pre-approval provisions set forth therein.
| Additions | ||||||||||||||||||||||||
| FOR THE YEAR ENDED | Balance at beginning of period | Charged to costs and expenses | Charged to other accounts | Deductions (a) | Translation | Balance at end of period | ||||||||||||||||||
| DECEMBER 31, 2014: | ||||||||||||||||||||||||
| Allowance for doubtful accounts | $ | 21 | $ | 10 | $ | 8 | $ | (5 | ) | $ | (2 | ) | $ | 32 | ||||||||||
| Allowance for obsolete and excess inventory | $ | 109 | $ | 65 | $ | (3 | ) | $ | (21 | ) | $ | (5 | ) | $ | 145 | |||||||||
| DECEMBER 31, 2013: | ||||||||||||||||||||||||
| Allowance for doubtful accounts | $ | 8 | $ | 14 | $ | – | $ | (1 | ) | $ | – | $ | 21 | |||||||||||
| Allowance for obsolete and excess inventory | $ | 89 | $ | 28 | $ | 4 | $ | (12 | ) | $ | – | $ | 109 | |||||||||||
| DECEMBER 31, 2012: | ||||||||||||||||||||||||
| Allowance for doubtful accounts | $ | 10 | $ | 1 | $ | – | $ | (3 | ) | $ | – | $ | 8 | |||||||||||
| Allowance for obsolete and excess inventory | $ | 82 | $ | 21 | $ | (2 | ) | $ | (12 | ) | $ | – | $ | 89 | ||||||||||
*Filed herewith
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 1, 2016 | CAMERON INTERNATIONAL CORPORATION | |
(Registrant) | ||
/s/ | ||
By: Charles M. Sledge | ||
Senior Vice President and Chief Financial Officer | ||
( |
EXHIBIT INDEX
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*Filed herewith